Question

od rate of 1) Huricane Corp. recently unchased corporate bonds in the secondary market with a par valu Sh million, a coupon rate of 12 percent (with annual coupon payments), and four years maturity. Ir Bullock intends to sell the hands in two years and expects investors required rate rerum at that time on similar investments to be 14 percent at that time, what is the expected market value of the bonds in two years? a. $9.33 million b. S11.00 million c. S10.64 million d. $9.82 million c. none of the above 15) A S1,000 par value bond, paying 50 semiannually, with an 8 percent yield to maturity and five years remaining to maturity should sell for a. $1.000.00 b. $1.081.11. c. $798.70 d. 5880.22 e none of the above. 16) I would like to purchase a bond that has a par value of $1,000, pays $80 at the end of each year in coupon payments, and has ten years remaining until maturity. If the prevailing annualized vield on other bonds with similar characteristics is 6 percent, how much will Stephanie pay for the bond? a $1,000.00 b. $1,147.20 c. $856.80 d. none of the above 17) Ali just purchased a $1.000 par value bond with a 10 percent annual coupon rate and the bond has four years remaining until maturity, and the yield to maturity is 12 percent. How much did Julia pay for the bond? a. $1.063.40 b. $1,000

Answer 1

rate positively ..

Ans 14	We have to use financial calculator to solve this
	put in calculator-
	FV		11000000
	PMT	11mil*12%	1320000
	I		14%
	N		2
	Compute PV		($10,637,734.69)
	Price =		10.64	mil
	ans = option c.		$                10.64	mil
Ans 15	We have to use financial calculator to solve this
	put in calculator-
	FV		1000
	PMT		50
	I	8%/2	4%
	N	5*2	10
	Compute PV		($1,081.11)
	Price =		$1,081.11
	ans = option b.		$           1,081.11
Ans 16
	We have to use financial calculator to solve this
	put in calculator-
	FV		1000
	PMT		80
	I		6%
	N		10
	Compute PV		($1,147.20)
	Price =		$1,147.20
	ans = option b.		$           1,147.20
Ans 17
	We have to use financial calculator to solve this
	put in calculator-
	FV		1000
	PMT	1000*10%	100
	I		12%
	N		4
	Compute PV		($939.25)
	Price =		$939.25