1. A 5.50 percent coupon bond with 14 years left to maturity can be called in 4 years. The call premium is one year of coupon payments. It is offered for sale at $1,092.50.
Required:
What is the yield to call of the bond?
2. Calculate the price of a zero coupon bond that matures in 18 years if the market interest rate is 5.20 percent.
3. A 7.20 percent corporate coupon bond is callable in 10 years for a call premium of 1 year of coupon payments. Assuming a par value of $1,000, what is the price paid to the bondholder if the issuer calls the bond?
4. A 3.250 percent TIPS has an original reference CPI of 179.00. If the current CPI is 206.00, What is the current interest payment and par value of the TIPS?
5. What's the current yield of a 6.80 percent coupon corporate bond quoted at a price of 97.48?
6. A 5.50 percent coupon bond with 14 years left to maturity is offered for sale at $975.50.
Required:
What yield to maturity is the bond offering? (Assume interest payments are paid semi annually.)
7. Compute the price of a 6.20 percent coupon bond with 16 years left to maturity and a market interest rate of 6.00 percent. (Assume interest payments are semi annual.) Is this a discount or premium bond?
8. A bond issued by IBM on December 1, 1996 is scheduled to mature on December 1, 2089. If today is December 2, 2012, what is this bond's time to maturity?
9. What's the taxable equivalent yield on a municipal bond with a yield to maturity of 4.10 percent for an investor in the 38 percent marginal tax bracket?
10. A 5.50 percent coupon bond with 19 years left to maturity is priced to offer a 7.80 percent yield to maturity. You believe that in one year, the yield to maturity will be 10.00 percent.
Required:
What is the change in price the bond will experience in dollars?