Question

1). Merton enterprises has bonds on the market making annual payments, with 13 years to maturity, $1,000 par value, and selling for $825. At this price, the bonds yield 7 percent. what must the coupon rate be on Merton's bonds?

2). Bonds of Zello Corporation with a par value of $1,000 sell for $1,080, mature in 18 years, and have a 7% annual coupon rate paid annually, what is the yield to maturity? what is the current yield? what is the capital gains (loss) yield?

3) CIR , inc, has 8 percent coupon bonds on the market that have 12 years left to maturity. The bonds have $1,000 par value and the YTM on these bonds is 10.5 percent. if the bonds make annual coupon payments, what is the current bond price? if the bonds make semi-annual coupon payments, what is the current bond price?

Answer 1

1

K = N

Bond Price =∑ [(Annual Coupon)/(1 + YTM)^k]     +   Par value/(1 + YTM)^N

k=1

K =13

825 =∑ [(Coupon rate*1000/100)/(1 + 7/100)^k]     +   1000/(1 + 7/100)^13

k=1

Coupon rate% = 4.91

Please ask remaining parts seperately, questions are unrelated