1. You have a bond with annual coupon payments of $30, the interest rate for comparable bonds is 5%, and there is a maturity value of $150 in 4 years. What is the current price of the bond?
(Show all work)
2. You buy a bond that is selling at par. ($100 face value, 8% coupon rate, 8% mkt rate, due in 3 years).You hold it for one year and the market interest rate changes to 10%; what is a fair price for this bond?
3. What is the value of a bond with a $50 face value, 10% coupon payments (received SEMIANNUAL), a market interest rate of 25%, and matures in 10 years.
4. You just sold a bond with annual coupon payments of $15, the interest rate for comparable bonds is 15%, and there is a maturity value of $60, and matures in 5 years. You bought this bond for $50 one year ago. What is your yield? (Remember that there are two components of yield, price appreciation and interest received; make sure you line up these amounts to find your total return)