1 The 8 percent coupon bonds of the Peterson Co. are selling for 98
percent of par value. The bonds mature in 5 years and pay interest
semi-annually. These bonds have a yield to maturity of _____ percent.
2 ABC Corp. issued 15-year bonds 2 years ago at a coupon rate of 10.6%.
The bonds make semi-annual payments. If these bonds currently sell for 97% of
par value, what is the YTM?
3 Stealers Wheel Software has 6.5% coupon bonds on the market with nine
years to maturity. The bonds make semi-annual payments and currently sell for
956.31% of par. What is the current yield?
4 Assume that you wish to purchase a 16-year bond that has a maturity
value of $1,000 and a coupon interest rate of 6%, paid semiannually. If you
require a 10.52% rate of return on this investment (YTM), what is the maximum
price that you should be willing to pay for this bond? That is, solve for PV.
5 A bond which sells for less than the face value is called a: Answer
premium bond. par value bond. debenture. perpetuity. discount bond.
6 The 13 percent, $1,000 face value bonds of Tim McKnight, Inc., are
currently selling at $1,084.97. What is the current yield?
7 The principal amount of a bond that is repaid at the end of term is
called the par value or the: Answer coupon face value coupon rate discount
amount back-end amount
8 ABC has issued a bond with the following characteristics: Par: $1,000;
Time to maturity: 13 years; Coupon rate: 11%; Assume annual coupon payments. Calculate
the price of this bond if the YTM is 10.44%
9 The 11.2 percent coupon bonds of the Peterson Co. are selling for
821.03 percent of par value. The bonds mature in 5 years and pay interest
semi-annually. These bonds have current yield of _____ percent.
10 ABC Inc., has $1,000 face value bonds outstanding. These bonds mature
in 3 years, and have a 6.5 percent coupon. The current price is quoted at 98.59
percent of par value. Assume semi-annual payments. What is the yield to
maturity?
11 ABC has issued a bond with the following characteristics: Par:
$1,000; Time to maturity: 19 years; Coupon rate: 9%; Assume semi-annual coupon
payments. Calculate the price of this bond if the YTM is 7.5%
12 You paid $908 for a corporate bond that has a 11.77% coupon rate.
What is the current yield? Hint: if nothing is mentioned, then assume par value
= $1,000
13 A premium bond is a bond that: Answer is selling for less than par
value. has a par value which exceeds the face value. has a market price which
exceeds the face value. is callable within 12 months or less. has a face value
in excess of $1,000.
14 ABC has issued a bond with the following characteristics: Par:
$1,000; Time to maturity: 17 years; Coupon rate: 9%; Assume semi-annual coupon
payments. Calculate the price of this bond if the YTM is 5.64%
15 A firm's bonds have maturity of 10 years with a $1000 face value, an
8% semi-annual coupon, are callable in 5 years, at $1,050, and currently sells
at a price of $1,100. What is the yield to call (YTC)?
16-ABC's bonds have a 9.5 percent coupon and pay interest semi-annually.
Currently, the bonds are quoted at 106.315 percent of par value. The bonds
mature in 8 years. What is the yield to maturity?
17-ABC wants to issue 17-year, zero coupon bonds that yield 8.87
percent. What price should they charge for these bonds if they have a par value
of $1,000? That is, solve for PV. Assume annual compounding. Hint: zero coupon
bonds means PMT = 0
18-BCD’s $1,000 par value bonds currently sell for $798.40. The coupon
rate is 10%, paid semi-annually. If the bonds have 5 years to maturity, what is
the yield to maturity?
19-ABC's Inc.'s bonds currently sell for $1,280 and have a par value of
$1,000. They pay a $135 annual coupon and have a 15-year maturity, but they can
be called in 5 years at $1,050. What is their yield to call (YTC)?
TUTORIAL
PREVIEW
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Nper = 5 x 2 =
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10
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PMT = 1000x8% x 1/2=
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40
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PV =
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-980
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FV =
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1,000
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Rate =?
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Solve for Rate
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Rate =
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4.25%
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yield to maturity =
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8.50%
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