1. You have to pay an annual coupon of 9% bond, the bond is traded in the market at USD 1,120, with a par value of USD 1,000. If the bond matures in 15 years:

a. What is the YTM Bond? YTM = YIELD TO MATURITY

b. What will be your Macaulay duration?

c. That percentage changes expected in the bond price if rates go i. 0.25%; ii. 0.5%; and iii. 0.75%?

2. Do you think investing a significant portion of its resources on Bond, you have an investment horizon of 5 years and its broker has given the following list of bonds, prices and features listed below:

a. Corporate bond sold at 105% semi-annual coupon paid to the order of 10.5% annually and has a face value of USD 1,000.

b. USD 1,110 corporate bond pays a coupon of 12% per annum with quarterly payments, the face value of the bond is $ 1,000

c. Corporate bond at 95.5%, 8.5% coupon, every six to around 11% in dollar coupon. Face value of USD 1,000.

Its portfolio you keep it in dollars. Which bond acquire assuming the same levels of risk for the three instruments?

3. Give a brief description of the following terms:

a. junk bond

b. convertible bond

c. perpetual bond

d. subordinated bond

e. Risk Rating

F. performance promise

g. YTC YIELD TO CALL

h. Yankee bonds

i. Duration of Macaluay.