1. Calculate the effective annual interest rate for a 5% coupon bond selling at par and paying coupons semi-annually.
2. Consider a government bond of 7% makes semiannual coupon payments on Jan 15 and July 15 of each year. The asking price for the bond on Jan 30 at £100:04. What is the invoice price of the bond? The coupon period has 182 days.
3. Debt: The firm can sell a 20-year, $1,000 par value, 9 percent bond for $980. A flotation cost of 2 percent of the face value would be required in addition to the discount of $40.
What is the firm's after-tax cost of debt? provide the steps in detail?including the fomula
4. Assume S = $42, K = 45, div = 0, r = 0.04, sigma(volatility)= 0.48, and 80 days until expiration. What is the premium on a knock-out put option with a down-and-out barrier of $44?
A) $2.13
B) $3.13
C) $3.47
D) $4.07