1. Is the yield to maturity on a bond the same thing as the required return? Is YTM the same thing as the coupon rate? Suppose today a 10% coupon bond sells at par? Two years from now the required return on the same bond is 8%. What is the coupon rate on the bond now? The YTM?
2. Suppose you buy a 7% coupon, 20 year bond today when it's first issued. If interest rates suddenly rise to 15%, what happens to the value of your bond? Why?
3. IRT Company has 7% coupon bonds on the market that have 8 years left to maturity. The bonds make annual payments. If the YTM on these bonds is 9%, what is the current bond price?
4. The Timber Co. has 10% coupon bonds on the market with 9 years left to maturity. The bonds make annual payments. If the bond currently sells for $1,145.70, what is the YTM?
5. MAX Enterprises has bonds on the market making annual payments, with 16 years to maturity and selling for $963. At this price, the bonds yield 7.5 percent. What must the coupon rate be on Merton's bonds?