Due: Tuesday, January 29th
1.
Please watch these videos on bonds, Bond Valuation (3:58), Bond Basics (7:04), and
Calculating YTM in EXCEL and TI w/ Bionic Turtle (8:57), then answer the following
questions:
A $1,000 par value bond, has an annual coupon rate of 6 percent, an annual yield to maturity of
7.5 percent, and 10 years until maturity. Assuming semi-annual coupon payments:
a.
What is the bond's coupon payment per period?
b.
What is the bond's price?
c.
If the bond were selling for $929, what would the annual yield-to-maturity be?
d.
If the bond were selling for $929, what would the effective yield-to-maturity if you
reinvest coupon payments at 9 percent?