1) a) An investor buys a zero-coupon bond with par value $1,000 for $576.71. The maturity date is Y years and the yield rate convertible semi-annually is 7%. Calculate Y.
b) A 15 year bond matures for its par value of $5,000. The coupon payable semi-annually is $125. Calculate the price of the bond at a 7% annual effective yield rate.
c) A 10-year $5,000 par value bond bearing a 7% coupon rate payable semi-annually is selling at par value. If prevailing market rates of interest suddenly go to 9% convertiblesemiannually, find the percentage change in the price of the bond. (Provide answer as percentage to 1 decimal place, don't forget to use the correct sign + or -).
d) A ten year $1,000 par value bond pays 9% coupons semiannually. The bond is priced at $1,167.25 to yield an annual nominal rate of 7% convertible semiannually.Calculate the redemption value of the bond. (Provide answer to nearest dollar.)
2) A 20-year, $4000 par value bond has 8% semiannual coupons and matures at par. In addition, the bond is callable at the end of the 10th through the 15th years at 105% of par. (Provide answers to the nearest cent.)
a) Find the price to yield 6% convertible semi-annually.
Price when called:
Price at maturity:
Price the investor should pay:
b) Find the price to yield 10% convertible semi-annually.
Price when called:
Price at maturity:
Price the investor should pay: