Question

6a. XYZ's Series A bond has 10 years to maturity and currently sells for $1280. The coupon rate is 6%. Calculate its yield-to-maturity. (9 pt.) 6b. From the stock report below, answer the following questions Symbol 1. SPY 2. XLF 3. BAC 4. IWM 5. EEM 6. QQQ 7. FAS 8. S 9. MSFT 10. F Shares 46,293, 246 35,819,312 19.701,657 13,535,046 11,722,239 10,939,671 8,336 264 7,342,896 7,309,489 6.702,661 Last 123.02 13.03 6.48 71.48 39.65 57.02 13.43 2.71 26.84 12.43 Change -2.47 -0.39 -0.24 -1.94 -0.73 -1.47 -1.14 0.02 -0.35 -0.08 High Low 125.77 122.78 13.32 12.96 6.79 6.46 73.47 71.16 40.22 39.43 58.56 56.93 14.76 13.21 2.72 2.53 27.22 26.73 12.64 12.14 Data for Oct 25, 23:59:59 i. How much did QQQ stock sell for on the previous day? 2pt ii. What was the value of Microsoft (MSFT) shares that was traded on this day? 2pt.

Answer 1

6a.

$BV_0 = C*(P/A,y,n)+FV*(P/F,y,n)$

where,

BV0 = Current market price of bond

C = Coupon Amount

FV = Face value

y = Yield to maturity

n = Years until maturity

$1280 = 60*(P/A,y,10)+1000*(P/F,y,10)$

by solving trial and error method, we will get,

$\bg_green \large y = 2.76\%$

6.b

i) QQQ stock last Price previous day

$\textup{= Current last price - Change}$

$\textup{= 57.02 + 1.47}$

$\bg_green \large \textup{= \$58.49}$

ii) Value of MSFST shares traded on this day

$\textup{= Shares traded * last price}$

$\textup{= 7,309,489* 26.84}$

$\bg_green \large \textup{= \$196,186,684.76}$

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.