18. Last year, BT Motors issued 10-year bonds with a 9 percent coupon and semi-a
ID: 2758064 • Letter: 1
Question
18. Last year, BT Motors issued 10-year bonds with a 9 percent coupon and semi-annual interest payments. What is the market price of a $1,000 bond if the yield to maturity is 8.9 percent?
A. $1,003.97
B. $1,006.53
C. $1,042.89 4
D. $1,414.14
E. $1,585.36
19. A $1,000 face value bond matures in 11 years, pays interest semiannually, and has a 6.5 percent coupon. The bond currently sells for $1,025. What is the yield to maturity?
A. 6.17 percent
B. 6.18 percent
C. 6.28 percent
D. 6.34 percent
E. 6.37 percent
20. A $1,000 par value 5 percent Treasury bond pays interest semiannually and matures in 7.5 years. What is the yield to maturity if the bond is currently quoted at a price of 112.34?
A. 3.14 percent
B. 3.18 percent
C. 3.23 percent
D. 6.28 percent
E. 6.36 percent
21. A $1,000 par value bond is currently valued at $1,037.84. The bond pays interest semi-annually, has 7 years to maturity, and has a yield to maturity of 7.3 percent. The coupon rate is _____ percent and the current yield is _____ percent.
A. 6.80; 7.21
B. 8.00; 7.71
C. 8.00; 7.81
D. 8.50; 8.22
E. 8.50; 8.30
24. Ted owns a bond which is callable in 2.5 years. The bond has a 6 percent coupon, pays interest semiannually, has a par value of $1,000, and has a yield to call of 6.3 percent. What is the call premium if the bond currently sells for $1,044.54? Hint: Call premium is the difference between call price and par value.
A. $50
B. $60
C. $70
D. $75
E. $80
Explanation / Answer
year interest present value@ 4.45% present value 1 45 0.957395883 43.08281474 2 45 0.916606877 41.24730947 3 45 0.877555651 39.49000428 4 45 0.840168167 37.80756753 5 45 0.804373545 36.1968095 6 45 0.77010392 34.6546764 7 45 0.737294323 33.17824452 8 45 0.705882549 31.76471472 9 45 0.675809047 30.4114071 10 45 0.647016799 29.11575596 11 45 0.61945122 27.87530489 12 45 0.593060048 26.68770215 13 45 0.567793248 25.55069617 14 45 0.543602918 24.46213132 15 45 0.520443196 23.41994382 16 45 0.498270173 22.4221578 17 45 0.477041813 21.46688157 18 45 0.456717868 20.55230404 19 45 0.437259806 19.67669128 20 45 0.418630738 18.83838323 1000 0.4186 418.6 q 18 Answer is B Sum 1006.501501 question no 19 62.72727273 1012.5 0.061952862 answer is B 6.18% question no 20 35.02133333 1056.17 0.033158803 3.315880335 answer is 3.23% near about answer to 21 answer is 8% and 7.71 .073 = int + (1000- 1037.84)/7 / (1000+1037.84) /2 = 8% interest rate is 8% this can be found by putting values in the formula given above current yield (interest/ market price)*100 7.708317274 7.71% answer to 22 answer is 51.38 which is near to 5o option A 42.184 30 0.969461949 29.08386 1022.27 30 0.93985647 28.19569 0.041265028 30 0.911155085 27.33465 30 0.883330184 26.49991 30 0.856355001 25.69065 1000 0.856355001 856.355 value of bond at call 993.1598 bond price 1044.54 call premium 51.38024
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.