Problem 1: Drake Ltd has issued bonds that are currently priced at $1056.70. They have a $1,000 par value and 9 years to maturity. They pay a semi-annual coupon of 7%. What is the annualised yield to maturity on this bond?
Problem 2: Tiffany Ltd bonds have a coupon rate of 6%, paid semi-annually, face value of $1,000, and mature at the end of 6 years. What is the current price on this bond if its yield to maturity is 8%.
Problem 3: You plan to purchase property in Melbourne 12 years from today at an estimated purchase price of $1,250,000. The funds for the property will be accumulated by making 12 equal annual deposits in your savings account, which earn 15% interest, compounded annually. If you make your first deposit at the end of this year and you would like your account to reach $1,250,000 when the final deposit is made, what will be the amount of each annual deposit?
Problem 4: You are reviewing an investment in a zero-coupon bond. The bond matures at the end of 5 years with a face value of $1,000. What value would you place on the bond if the yield to maturity is 9%?