Question

Question 15 1 pts Assume that you wish to buy a bond with 27 years to maturity, with a par value of $1,000, and a coupon rate of 22.33%6. Assume semi-annual payments. If the yield to maturity (YTM) is 21.43 % , what is today's price of this bond? Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box Question 16 1 pts Price a 2-yr 4% semiannual coupon bond with a par value of $1000 and the yield to maturity (discount rate) is 4.90% per annum. Round the answer to the nearest 2 decimal points. If your answer $12.345, enter 12.35" in the answer box. Question 17 1 pts ABC Inc. recently issued $1,000 par bonds at a 3.55% coupon rate. If the bonds have 12 years to maturity and current price of $850, what is the yield to maturity? Assume semi-annual compounding. Note: Convert your answer to percentage and round off to two decimal points. Do not enter % in the answer box.

Answer 1

Pb 15:

Price = PV of CFs from it.

Period	CF	PVF @10.72%	Disc CF
1	$    111.65	0.9032	$    100.84
2	$    111.65	0.8158	$      91.08
3	$    111.65	0.7369	$      82.27
4	$    111.65	0.6655	$      74.31
5	$    111.65	0.6011	$      67.12
6	$    111.65	0.5430	$      60.62
7	$    111.65	0.4904	$      54.75
8	$    111.65	0.4429	$      49.45
9	$    111.65	0.4001	$      44.67
10	$    111.65	0.3614	$      40.35
11	$    111.65	0.3264	$      36.44
12	$    111.65	0.2948	$      32.91
13	$    111.65	0.2663	$      29.73
14	$    111.65	0.2405	$      26.85
15	$    111.65	0.2172	$      24.25
16	$    111.65	0.1962	$      21.91
17	$    111.65	0.1772	$      19.79
18	$    111.65	0.1601	$      17.87
19	$    111.65	0.1446	$      16.14
20	$    111.65	0.1306	$      14.58
21	$    111.65	0.1179	$      13.17
22	$    111.65	0.1065	$      11.89
23	$    111.65	0.0962	$      10.74
24	$    111.65	0.0869	$        9.70
25	$    111.65	0.0785	$        8.76
26	$    111.65	0.0709	$        7.92
27	$    111.65	0.0640	$        7.15
28	$    111.65	0.0578	$        6.46
29	$    111.65	0.0522	$        5.83
30	$    111.65	0.0472	$        5.27
31	$    111.65	0.0426	$        4.76
32	$    111.65	0.0385	$        4.30
33	$    111.65	0.0348	$        3.88
34	$    111.65	0.0314	$        3.51
35	$    111.65	0.0284	$        3.17
36	$    111.65	0.0256	$        2.86
37	$    111.65	0.0231	$        2.58
38	$    111.65	0.0209	$        2.33
39	$    111.65	0.0189	$        2.11
40	$    111.65	0.0171	$        1.90
41	$    111.65	0.0154	$        1.72
42	$    111.65	0.0139	$        1.55
43	$    111.65	0.0126	$        1.40
44	$    111.65	0.0113	$        1.27
45	$    111.65	0.0102	$        1.14
46	$    111.65	0.0093	$        1.03
47	$    111.65	0.0084	$        0.93
48	$    111.65	0.0076	$        0.84
49	$    111.65	0.0068	$        0.76
50	$    111.65	0.0062	$        0.69
51	$    111.65	0.0056	$        0.62
52	$    111.65	0.0050	$        0.56
53	$    111.65	0.0045	$        0.51
54	$    111.65	0.0041	$        0.46
54	$ 1,000.00	0.0041	$        4.10
Price of Bond			$1,041.82

Pb 16:

Price of Bond = PV of CFs from it.

Period	CF	PVF @2.45%	Disc CF
1	$      20.00	0.9761	$   19.52
2	$      20.00	0.9527	$   19.05
3	$      20.00	0.9300	$   18.60
4	$      20.00	0.9077	$   18.15
4	$ 1,000.00	0.9077	$ 907.72
Price of Bond			$ 983.05

Pb 17:

Period	CF	PVF @2.5%	Disc CF	PVf @3%	Disc CF
0	$ -850.00	1.0000	$ -850.00	1.0000	$ -850.00
1	$      17.75	0.9756	$    17.32	0.9709	$    17.23
2	$      17.75	0.9518	$    16.89	0.9426	$    16.73
3	$      17.75	0.9286	$    16.48	0.9151	$    16.24
4	$      17.75	0.9060	$    16.08	0.8885	$    15.77
5	$      17.75	0.8839	$    15.69	0.8626	$    15.31
6	$      17.75	0.8623	$    15.31	0.8375	$    14.87
7	$      17.75	0.8413	$    14.93	0.8131	$    14.43
8	$      17.75	0.8207	$    14.57	0.7894	$    14.01
9	$      17.75	0.8007	$    14.21	0.7664	$    13.60
10	$      17.75	0.7812	$    13.87	0.7441	$    13.21
11	$      17.75	0.7621	$    13.53	0.7224	$    12.82
12	$      17.75	0.7436	$    13.20	0.7014	$    12.45
13	$      17.75	0.7254	$    12.88	0.6810	$    12.09
14	$      17.75	0.7077	$    12.56	0.6611	$    11.73
15	$      17.75	0.6905	$    12.26	0.6419	$    11.39
16	$      17.75	0.6736	$    11.96	0.6232	$    11.06
17	$      17.75	0.6572	$    11.67	0.6050	$    10.74
18	$      17.75	0.6412	$    11.38	0.5874	$    10.43
19	$      17.75	0.6255	$    11.10	0.5703	$    10.12
20	$      17.75	0.6103	$    10.83	0.5537	$       9.83
21	$      17.75	0.5954	$    10.57	0.5375	$       9.54
22	$      17.75	0.5809	$    10.31	0.5219	$       9.26
23	$      17.75	0.5667	$    10.06	0.5067	$       8.99
24	$      17.75	0.5529	$       9.81	0.4919	$       8.73
24	$ 1,000.00	0.5529	$ 552.88	0.4919	$ 491.93
NPV			$    20.33		$   -57.46

YTM = Rate at which least +ve NPV +[ NPV at that rate / Change in NPV due to 0.5% inc in Disc Rate ] * 0.5%

= 2.5% + [ 20.33 / 77.79 ] * 0.5%

= 2.5% + [ 0.26 * 0.5%]

= 2.5% + 0.13%

= 2.63%

YTM per anum = 2.63% * 12/ 6

= 5.26%