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Ch. 10 & 11 Hw

In: Business and Management

Submitted By abales2008
Words 259
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1.Calculate Invoice price for bond maturing Nov. 15, 2012 (in Excel). Assume today’s date is 1/15/2009 2. Find the duration of a 6% coupon bond making annual coupon payments if it has three years until maturity and a yield to maturity of 10%. 3. A) A zero-coupon bond with face value $1,000 and maturity of 6 years sells for $887.25. What is its yield to maturity? B) What will happen to its YTM if the price goes up to $899.99? 4. Why do bond prices go down when interest rates go up? Don’t investors like high interest rates? 5. A) ABC bond has a 3.5 coupon and 9 years till maturity. Yield to maturity is 2%. If you want to sell this bond what will be the flat price of this bond?

B) A bond has a current yield of _________?

C) What is the invoice price of this bond if the last interest (coupon) payment was made two months ago? The coupon period has 182 days.

6. A 4.25 coupon bond with maturity of 6 years sells for 113.5. What is the YTM? 7. A callable bond has a par value of $1,000, a time to maturity of 10 years, and a coupon rate of 8% with interest paid annually. Bond is callable in 3 years at a call price of $1100. A) If the current market price is 114 percent of the par value, what is the YTM? B) What is the yield to…...

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