Problem 1: Kiss the Sky Enterprises has bonds on the market making annual payments, with 16 years to maturity, and selling for $960. At this price, the bonds yield 8.5 percent. What must the coupon rate be on the bonds?
- 8.37%
- 16.07%
- 8.50%
- 8.13%
- 8.03%
Problem 2: Grohl Co. issued 19-year bonds a year ago at a coupon rate of 8 percent. The bonds make semiannual payments. If the YTM on these bonds is 11 percent, what is the current bond price?
- $766.96
- $1,858.48
- $617.86
- $830.89
- $776.96
Problem 3: Grohl Co. issued 6-year bonds a year ago at a coupon rate of 9 percent. The bonds make semiannual payments. If the YTM on these bonds is 6 percent, what is the current bond price?
- $1,137.95
- $1,086.26
- $1,259.91
- $800.13
- $1,127.95
Problem 4: Seether Co. wants to issue new 10-year bonds for some much-needed expansion projects. The company currently has 9.2 percent coupon bonds on the market that sell for $829.34, make semiannual payments, and mature in 10 years. What coupon rate should the company set on its new bonds if it wants them to sell at par?
- 12.20%
- 6.10%
- 12.10%
- 11.90%
- 12.50%
Problem 5: You want to have $3.5 million in real dollars in an account when you retire in 40 years. The nominal return on your investment is 12 percent and the inflation rate is 3.5 percent. What real amount must you deposit each year to achieve your goal?
- $12,773.89
- $4,562.69
- $13,412.59
- $13,284.85
- $12,135.2