# ADelpilar W4 Problem Set

CPN= 1000 x .08= 80

P= 80 (1/.09) {1- [1/(1.09)^5]} + [1000/(1.09)^5]

= 73.39 (.351) + 649.35

= $675.11

Bonds-2. A certain bond has 12 years left to maturity. Interest is paid annually at a coupon rate of 10%. The bonds are currently selling for $850. What is their YTM? 850= 1000/ (1+y)^12

850 * (1+y)^12= 1000

(1+y) ^12= 1.18

1+y= (1.18)^(1/12)

Y= 1.014-1

Y= .014 or 1.4%

Bonds-3. A certain bond pays a semiannual coupon rate at a 10% annual rate. The bond has a par value of $1,000. There are eight years to maturity. The yield to maturity is 9%. What is the current price of the bond? $1000 * 10%/2= 50

P= 50 * (1/.09) {1-[1/(1.09)^8} + [1000/(1.09)^8]80.29

= 555.56 (.50) + 502.51

= 277.78+ 502.51

= $780.29

Bonds-4. A particular corporate bond has a par value of $1,000. Coupon payments are $40 and are paid twice a year. Seven years are left on the life of the bond.The YTM is 9%. What is the price of the bond? P= 80 * (1/.09) {1-{1/(1.09)^7} + [1000/(1.09)^7]

= 888.89 (.45) + 546.45

P= $946.45

Bond-5. A given bond has 5 years to maturity. It has a face value of $1,000. It has a YTM of 5% and the coupons are paid semiannually at a 10% annual rate. What does the bond currently sell for? P= 50 * (1/.05) {1-[1/(1.05)^5} + [1000/(1.05)^5]

= 1000 (.22) + 781.25

= 220.00 + 781.25

P= $1001.25

Bond-6. A given bond has five years left to maturity. Interest is paid annually and the annual coupon rate is 9%. The par value of the bond is $1,000. The bond currently sells for $1,000. What is the yield to maturity? 1000= 90 (1/y) {1-[1/ (1+y)^5]} + {1000/ (1+y)^5}

EXCEL FORMULA : RATE (5, 90, -1000, 1000)

RATE: 9%

9-1.Assume Evco, Inc., has a current price of $50 and will...

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