Details of the Bond Portfolio:
Par Value
Maturity
Coupon
Cost Basis
FMV
10,000 US T-bills
$10,000
1 year
0%
$9,640.00
$9,643.20
20,000 US T-bonds
$20,000
30 years
8%
$20,000
$22,494.47
10,000 US T-bonds
$10,000
20 years
0%
$1,313
$2,625.30
20,000 Super Co. bonds
$20,000
20 years
9%
$20,000
$24,271.01
15,000 Meager Bonds
$15,000
25 years
9%
$15,000
$3,000.47
25,000 TN Municipal bonds
$25,000
15 years
6%
$25,000
$27,616.29
Money Market Account
$10,349.26
TOTAL
$100,000.00
Note: The Super Co. bonds are investment grade quality while the Meager Bonds are junk bonds.
Determine the Yield to Maturity for each bond using the current fair market value (FMV):
1. US T-bills
2. US T-bonds 8%
3. US T-bonds 0%
4. Super Co.
5. Meager Co.
6. TN Municipal