1.) Maturity Risk Premium

The real risk-free rate is 3%, and inflation is expected to be 4% for the next 2 years. A 2-year Treasury security yields 9%. What is the maturity risk premium for the 2-year security?

2.) Default Risk Premium

A Treasury bond that matures in 10 years has a yield of 4%. A 10-year corporate bond has a yield of 9.25%. Assume that the liquidity premium on the corporate bond is 0.5%. What is the default risk premium on the corporate bond?

3.) Default Risk Premium

A company's 5-year bonds are yielding 8.1% per year. Treasury bonds with the same maturity are yielding 6.25% per year, and the real risk-free rate (r*) is 2.05%.

The average inflation premium is 3.8%, and the maturity risk premium is estimated to be 0.1 x (t - 1)%, where t = number of years to maturity. If the liquidity premium is 1.45%, what is the default risk premium on the corporate bonds?

4.) Pure Expectations Theory

Interest rates on 4-year Treasury securities are currently 6.75%, while 6-year Treasury securities yield 7.35%. If the pure expectations theory is correct, what does the market believe that 2-year securities will be yielding 4 years from now?

5.)One-year Treasury securities yield 2.3%. The market anticipates that 1 year from now, 1-year Treasury securities will yield 6.3%. If the pure expectations theory is correct, what is the yield today for 2-year Treasury securities?

6.) price of annual coupon bond

Madsen Motors's bonds have 5 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 9.5%; and the yield to maturity is 10%. What is the bond's current market price?

7.) current yield of annual coupon bond

Pelzer Printing Inc. has bonds outstanding with 10 years left to maturity. The bonds have an 9% annual coupon rate and were issued 1 year ago at their par value of $1,000. However, due to changes in interest rates, the bond's market price has fallen to $950.70. The capital gains yield last year was -4.93%.

What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places.%

For the coming year, what is the expected current yield? (Hint: Refer to footnote 7 for the definition of the current yield and to Table 7.1.) Do not round intermediate calculations. Round your answer to two decimal places.%

For the coming year, what is the expected capital gains yield? (Hint: Refer to footnote 7 for the definition of the current yield and to Table 7.1.) Do not round intermediate calculations. Round your answer to two decimal places.

8.) YTM of annual coupon bond

-A bond has a $1,000 par value, 10 years to maturity, and a 8% annual coupon and sells for $980.

What is its yield to maturity (YTM)? Round your answer to two decimal places.

Assume that the yield to maturity remains constant for the next 2 years. What will the price be 2 years from today? Do not round intermediate calculations. Round your answer to the nearest cent.

9.) Harrimon Industries bonds have 6 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 8%.

What is the yield to maturity at a current market price of $794?%

10.) YTC of annual coupon bond

Seven years ago the Templeton Company issued 26-year bonds with a 11% annual coupon rate at their $1,000 par value. The bonds had a 5% call premium, with 5 years of call protection. Today Templeton called the bonds.

Compute the realized rate of return for an investor who purchased the bonds when they were issued and held them until they were called. Round your answer to two decimal places.

11.) price of semiannual coupon bond

Nesmith Corporation's outstanding bonds have a $1,000 par value, a 7% semiannual coupon, 7 years to maturity, and an 9% YTM. What is the bond's price?

12.) Price and yield

A 9% semiannual coupon bond matures in 6 years. The bond has a face value of $1,000 and a current yield of 8.7643%.

What is the bond's price? Do not round intermediate calculations.$

What is the bond's YTM?

13.) effective annual yield (annual vs. semiannual bond)

You are considering a 10-year, $1,000 par value bond. Its coupon rate is 8%, and interest is paid semiannually. If you require an "effective" annual interest rate (not a nominal rate) of 8.72%, how much should you be willing to pay for the bond?

14.) total return for 1-year bond investment

Last year Janet purchased a $1,000 face value corporate bond with an 12% annual coupon rate and a 20-year maturity. At the time of the purchase, it had an expected yield to maturity of 12.99%. If Janet sold the bond today for $985.41, what rate of return would she have earned for the past year?

15. price for bond at constant YTM

Bond X is noncallable and has 20 years to maturity, a 9% annual coupon, and a $1,000 par value. Your required return on Bond X is 10%; and if you buy it, you plan to hold it for 5 years. You (and the market) have expectations that in 5 years the yield to maturity on a 15-year bond with similar risk will be 7%. How much should you be willing to pay for Bond X today?

16. YTC for semiannual bond

A firm's bonds have a maturity of 12 years with a $1,000 face value, have an 8% semiannual coupon, are callable in 6 years at $1,058, and currently sell at a price of $1,111.29.

What is their nominal yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places.%

What is their nominal yield to call? Do not round intermediate calculations.%

17) Bond yields

One year ago Carson Industries issued a 10-year, 14% semiannual coupon bond at its par value of $1,000. Currently, the bond can be called in 6 years at a price of $1,070, and it now sells for $1,280.

What is the bond's nominal yield to maturity? Do not round intermediate calculations.%

What is the bond's nominal yield to call? Do not round intermediate calculations.%

18. number of OID bonds vs. coupon bonds at par

Yield to call

It is now January 1, 2016, and you are considering the purchase of an outstanding bond that was issued on January 1, 2014. It has a 7.5% annual coupon and had a 30-year original maturity.

(It matures on December 31, 2043.) There is 5 years of call protection (until December 31, 2018), after which time it can be called at 109-that is, at 109% of par, or $1,090. Interest rates have declined since it was issued, and it is now selling at 119.575% of par, or $1,195.75.

What is the yield to maturity? Round your answer to two decimal places.%

What is the yield to call? Round your answer to two decimal places.

PLEASE SHOW WORK