1) If 10-year T-bonds have a yield of 6.2%, 10-year corporate bonds yield 8.5%, the maturity risk premium on all 10-year bonds is 1.3%, and corporate bonds have a 0.4% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk premium on the corporate bond?

2) Assume we make a valuation of the same bond 5 years from now. Required rate of return did not change. Find the present value of all future payments, including par value, that will be paid to the investor 15 years from now.

3) How the value of the bond will change 5 years from now if the required rate of return change to 16%?

4) How the value of the bond will change 5 years from now if the required rate of return change to 12%?

5) Consider a bond of 10 years before the maturity, 14% coupon rate paid semiannually, 12% required return, $1000 par value. Find PV?

6) Suppose we are offered a 10-year, 11% annual coupon, $1000 face value bond at a price of $1200. What rate of interest would you earn on your investment if you bought the bond and held it to maturity?