1. Gugenheim, Inc. offers a 6 percent coupon bond with annual payments. The yield to maturity is 9.8 percent and the maturity date is 6 years. What is the market price of a $1,000 face value bond?
2. A bond that pays interest annually yields a 6.15 percent rate of return. The inflation rate for the same period is 3.46 percent. What is the real rate of return on this bond? (Use the exact relationship between interest rates and inflation, not the approximate one. Enter answer in percents, not in decimals.)
3. The outstanding bonds of Roy Thomas, Inc. provide a real rate of return of 3.59 percent. The current rate of inflation is 2.15 percent. What is the nominal rate of return on these bonds? (Use the exact relationship between rates of return and inflation. Provide answer in percents, not in decimals.)
4. The nominal rate of return on the bonds of Stu's Boats is 6.29 percent. The real rate of return is 5.78 percent. What is the rate of inflation? (Use the exact relationship between rates of return and inflation. Provide answer in percents, not in decimals.)
5. The MerryWeather Firm wants to raise $17 million to expand its business. To accomplish this, the firm plans to sell 16-year, $1,000 face value zero-coupon bonds. The bonds will be priced to yield 8 percent. What is the minimum number of bonds the firm must sell to raise the money it needs? Use annual compounding.