Question

1)A Ford Motor Co. coupon bond has a coupon rate of 7​%, and pays annual coupons. The next coupon is due tomorrow and the bond matures 40 years from tomorrow. The yield on the bond issue is 6.15​%. At what price should this bond trade​ today, assuming a face value of ​$1,000​? The price of the bond today should be ​$

2) If the nominal rate of interest is 13.07% and the real rate of interest is 7.09 % what is the expected rate of​ inflation? The expected rate of inflation is %

3) What is the percentage change in price for a zero coupon bond if the yield changes from 6.5% to 5.5%? The bond has a face value of ​$1,000 and it matures in 10 years. Use the price determined from the first​ yield, 6.5%, as the base in the percentage calculation. The percentage change in the bond price if the yield changes from 6.5% to 5.5​% is ​%

4) A zero coupon bond has a face value of $1,000  and matures in 5 years. Investors require​ a(n) 7.8 % annual return on these bonds. What should be the selling price of the​ bond?

The price of the bond is $

Answer 1

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