1. ABC Corp has a 8% bond that matures in 4 years, The present discount rate is 5%. What is the current value of the bond?

2. DEF Corp has 6% bond that matures in 10 years. The bond currently sells for $950.

• What is the nominal yield
• What is the current yield
• What is the yield to maturity

3. GHI Corp. has convertible bond with a conversion price of $40

• What is the conversion rate?
• If the bond sells for $900, then what is the stock parity price
• If the stock sells for $30, then what is the bond parity price

4. A zero-coupon bond matures in 10 years and is issued at a discounted price of $200. What is the yield to maturity?

5. An individual in the 30% federal tax bracket is deciding between a 3.5% municipal bond or a 5.5% corporate bond. What bond should they choose based on after-tax yield?