1. A year, 4.00% coupon bond is priced at 948.71. a. What is the yield on the bond? b. After receiving the first coupon payment you sell the bond at a yield of 4.00%. i. What is the capital gain or loss)? ii. What is the return? 2. The duration of a bond is 4.25 and its current price is 1,300. If the yield on the bond falls from 5 percent to 3 percent by how much will the price change? 3. A 10-year corporate bond yield 6.00 percent, 10-year UST bond yields 4.00 percent and a 1-month T-bill yields 2 percent. What is the a. Risk-free return b. Interest rate risk premium C. Default risk premium 4. The same maturity UST bond and TIPS yield 4 percent and 0.2 percent, respectively. What is the implied inflation rate? 5. Beverly Bank is offering 30-year mortgages at an APR of 4.00 percent. The bank applies a LTV ratio of 80 percent and a HER of 28%. Your new mortgage has a loan balance of 350,000. a. What is the price of the home purchased? b. What is your home equity? c. What is the monthly mortgage payment? d. What is the minimum gross annual income needed to support the mortgage payment? e. What dollar amount of the first mortgage payment goes towards principal reduction? 6. You have made 20 monthly payments of 1,500 on a 279,422 mortgage with an APR of 5 percent. a. What is the loan balance? b. Total interest paid over the 20 months? c. The APR on new mortgages is 4 percent. 1. Upon refinancing what is the maximum "cash-out" amount you can receive? ii. Applying the LTV ratio of 80 percent to the new loan balance by what ACR would the home need to have appreciated over the previous 20 months? iii. Upon refinancing what is the maximum monthly savings on the mortgage payment? iv. Upon refinancing you want to reduce the monthly payment by 100 and have 15,000 upfront for a vacation. How much (sooner) or later, in months, will the mortgage be paid off? 7. Your gross annual income is 60,000 the APR on a 30-year mortgage is 4.50%. Assuming a LTV ratio of 80% and a HER of 28%, what is the maximum price you can afford to pay for a home