1. Bond Valuation

Nungesser Corporation has issued bonds that have a 9 percent coupon rate, payable semiannually. The bonds mature in 8 years, have a face value of $1,000, and a yield to maturity of 8.5 percent. What is the price of the bonds?

2. Bond Valuation The Garraty Company has two bond issues outstanding. Both bonds pay $100 annual interest plus $1,000 at maturity. Bond L has a maturity of 15 years, and Bond S a maturity of 1 year.

a. What will be the value of each of these bonds when the going rate of interest is (1) 5 percent, (2) 8 percent, and (3) 12 percent? Assume that there is only one more interest payment to be made on Bond S.

b. Why does the longer-term (15-year) bond fluctuate more when interest rates change than does the shorter-term bond (1-year)?

3. Bond yields

A 10-year, 12 percent semiannual coupon bond, with a par value of $1,000, may be called in 4 years at a call price of $1,060. The bond sells for $1,100. (Assume that the bond has just been issued.)

a. What is the bonds yield to maturity?

b. What is the bonds current yield?

c. What is the bonds capital gain or loss yield?

d. What is the bonds yield to call?

4. Current yield and yield to maturity

A bond that matures in 6 years has an 8 percent coupon rate, semiannual payments, a face value of $1,000, and a 7.7 percent current yield. What is the bonds nominal yield to maturity (YTM)?