Question

1. A Treasury note has 9 years till maturity is quoted at 96:17 with a 4.25% coupon. The bond pays interest semiannually. What is the yield to maturity on the bond?

2. Radio Shack needs to raise $4.75 million for an expansion project. The firm wants to raise this money by selling zero coupon bonds with a par value of $1,000 that mature in 15 years. The market yield on similar bonds is 6.85 percent. How many bonds must The Outlet sell to raise the money it needs? (Assume semi-annual compounding.)

3. Suncoast Corporation’s bonds have a 18-year maturity, a 5.5% semiannual coupon, and a par value of $1,000. The going interest rate (rd) is 8.25%, based on semiannual compounding.What is the bond’s price?

4. Bailey Corporation has $1,000 face value bonds outstanding with a quote of 94.23. The bonds pay interest annually, mature in 14 years, and have a yield to maturity of 6.47 percent. What is the current yield?

5. Magic Wand’s bonds currently sell for $1,225 and have a par value of $1,000. They pay a $98 annual coupon and have a 13-year maturity, but they can be called in 6 years at $1,150. What is their yield to call (YTC)?

Answer 1

1)

Hence, Yield to maturity is 4.72% (2.36%*2)