1. You are a credit analyst in the asset management department of a large insurance company. The credit department is researching an investment in a syndicated loan made to a large firm. The loan is an “amortized loan” with a 7% interest rate payable semi-annually. The original term was 10 years. For analytical purposes, assume the loan trades in $1000 increments. What are the semi-annual payments on the loan?
$70.36
$72.62
$81.47
$85.00
$91.52
2. The amortized loan had an original term of 10 years but 2 years have passed. What is the outstanding balance on the loan with 8 years to maturity?
$787.59
$800.00
$850.95
$878.27
$985.31
3. Assume the loan has been outstanding for 2 years so there are 8 years to maturity. Payments on the loan are up to date and the fourth payment has just been made so the next payment is due in 6 months. The loan is currently trading at 87% of the remaining balance of the loan. What would the loan trade at in dollar terms?
$685.20
$696.00
$740.33
$764.09
$857.22
4. What is the yield to maturity on the loan?
6.31%
6.80%
9.94%
10.84%
13.09%