Q1: Firm A is issuing a zero-coupon bond that will have a maturity of 50 years. The bond's par value is $1,000, and the current interest rate is 7.5%. What is the price of this bond?
Q2: What is the price of a 5% coupon bond with 20 years left to maturity and a market interest rate of 6.25%? Is this a discount or premium bond? (Hint: interest payments are semi-annual and fair value is $1,000).
Q3: A6.25% coupon bond with20 years left to maturity is offered for sale at $1017.20. What yield to maturity is the bond offering? (Hint: interest payments are paid semi-annually and par value is $1,000)?
Q4: What's the taxable equivalent yield on a municipal bond with a yield to maturity of 4.25%for an investor in the 28%marginal tax bracket?
Q5: A 5.25% coupon bond with 14 years left to maturity can be called in 4 years. The call premium is one year of coupon payments. It is offered for sale at $1,075.50. What is the yield to call (YTC) of the bond?