Question

please show how to calculate with financial calculator.

Question 3. Jones Corporation has zero coupon bonds on the market with a par of s1,000 and 8 years left to maturity. If the market interest rate on these bonds is 6 percent what is the current bond price? (Use the semi-annual interest payment model.) Question 4. Wilson Corporation has 5 percent coupon bonds on the market with a par of $1,000 and 6 years left to maturity. The bonds make annual interest payments. If these bonds currently sell for $800, what is its yield to maturity (YTM)? Question 5. Linville Corporation issued 15-year, par $1,000 bonds ten years ago at a coupon rate of 5 percent. The bonds make semi-annual payments. If these bonds currently sell for 90 percent of par value, what is its yield to maturity (YTM)? Question 6. Pecos Company has just issued a 10-year, 10 percent coupon rate, $1,000- par bond that pays interest semiannually. Three years later, if the going rate of interest on the bond falls to 8 percent, what is the value of the bond? Question 7. Karen just bought a 10-year, 5 % coupon bond with $1,000 par for $825. If she sells this bond four years later for $950, what is her realized yield in year 4 (with semi-annual interests)?

Answer 1

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Par value = 1000 Interest = 6%. = 3%. Interest is paid Time = 8*2= 16 period. - semiannually. Current bond price - Par value [1+ Inforest No. of period 1000 (1.0316 = $623.17 Answer Coupon = 5% of 1000 = 50 Time= 6 year. Present Value = 900 Face value = 1000 Using financial calculator, PMT=50 yield to pv= - 800 FV=1000 CPT 119 maturity. 9.53% Ansoor.