1. (2 points) Ascension issues a 10-year bond with an annual coupon of 4 percent and a face value of $1000. What is the value of the bond if the yield to maturity is 3.5 percent?

2. (2 points) Ascension has a bond with a 10-year maturity, a coupon rate of 5 percent, and a face value of $1000. The bond pays interest semiannually. What is the bond's price if the yield is 4 percent compounded semiannually (2% per six months)?

3. (2 points) John suffered a cardiac event while at a ski resort in Utah and was airlifted to a hospital in Salt Lake City. John's family neglected to discuss the air transport with his insurance carrier before the airlift. John survived the airlift but is not sure hell survive the bill from the air transport. Considering his deductible and co-pay, John's out-of- pocket cost is $711,021. Johns credit union has agreed to a 15-year loan at 6% compounded monthly (or 6%/12 = 0.5% per month). What is Johns monthly payment on the loan assuming end-of-month payments?

4. The nominal interest rate on Tenet Healthcare debt is 12 percent per year compounded quarterly. The inflation rate is 2% per year compounded quarterly.

a. (2 points) What is Tenet's quarterly real rate of interest from the Fisher equation?

b. (2 points) Given your answer to part a., what is Tenet's effective annual real rate of interest?

5. Suppose Ascension has three debt obligations outstanding. Bond A has a $1000 par value, a 5% annual coupon, and a 10-year maturity. Bond B is a zero-coupon bond with a $1000 par value and a 10-year maturity. Bond C has a maturity of 1 year, an annual coupon rate of 4%, and a par value of $100. Bond D is a zero-coupon bond with a $100 par and a 1-year maturity. The yield curve is flat, and the yield to maturity on all 4 bonds is 4% per year.

a. (1 point) Find the price of each bond.

b. (1 point) Suppose the yield to maturity falls to 3% per year. Find the price of each bond.

c. (2 points) Find the percentage change in each bond price.

d. (2 points) Which bond is the most sensitive to changes in the yield to maturity? Why

6. (2 points) The U.S. Centers for Medicare & Medicaid Services compiles National Health Expenditures (NHE) data. According to NHE data, total healthcare spending in the U.S. was $355 per capita in 1970 (in 1970 dollars). Healthcare spending in the U.S. rose to $10,739 per capita in 2017 (in 2017 dollars). Inflation averaged 3.51% per year during the 47 years between 1970 and 2017. Restate 1970s per capital expenditure of $355 in 2017 dollars.

7. (2 points) A 5-year bond with a 10 percent annual coupon and $1,000 face value is selling for $1,079.85. What is the bond's yield to maturity?