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Instructions: Show all of your work for maximum credit. If using a financial calculator you must write which buttons you have used (i.e., set on 12 p/yr, 1000 pv, 5 n, etc.).

There are a total of 25 points possible.

What is the present value of a 25 year bond with a face value of $1,000 that pays interest semi-annually and has a 6.60% annual coupon if the investor's required rate of return is 8.0%?

A 20 year bond with a face value of $1,000 and an annual coupon rate of 7.0% currently sells for $1042.00.

a. What is the current yield of the bond?

b. What is the yield to maturity of the bond?

c. What is the capital gains yield of the bond?

You observe the following corporate bond quotes in the newspaper:

a. What is the closing (last) price of Green Tree Inc. in dollars?

b. Is Green Tree selling at a premium or discount?

c. What is the current yield of the BBC corp. bond?

d. Will the capital gains yield of the Green Tree bond be positive or negative?

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92766717

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