Question

7. Mides cooperation bonds mature in 3 years and have a yield tom of the bond is $1000. The bond have a 10% coupon Tate What is the capital gain yield (loss) on this bond? a, 9.625% b. 1,125% b. 8.5% d. 1.125% have a yield to maturity of 8.5%. The par value coupon rate and pay interest on semiannual basis. 8. A ten year bond is currently selling for $1037 and has yield to maturity of 6.23%, W coupon rate for this bond if the face value is $10002 a. 6.75% b. 7.5% C, 8.5% d. 9.5% 9. A semiannual corporate bond has a face value of $1.000, a yield to maturity of 12 percent, and a coupon rate of 7.5 percent. The bond matures 10 years from today. This bond: a, pays interest payments of $75.00 every six months b. sells at par value. e, is currently quoted at a price of 101.02. d. has a current yield of 7.34 percent

Answer 1

8.

We will use Excel's PMT function to derive the coupon rate for this bond

1000 1037 Face Value or Redemption Value Current Selling Price or Present Value of Bond No of Years YTM 10 6.23% Coupon Amount ($67.38) Coupon rate 6.74% 10 11

1000 1037 Face Value or Redemption Value Current Selling Price or Present Value of Bond No of Years YTM 0.0623 Coupon Amount =PMT(C6,C5,C4,-C3)

Coupon Rate = 67.38 / 1000 * 100 = 6.75%

Correct answer is Option A