1. Calculate the value of a zero-coupon bond that matures in 10 years and has a $12,000 par value. The market required rate of return on the bond is 6.50 percent. 2 2. A 10-year semi-annual coupon bond has a market value of $1,120. The bond carries a 6 percent coupon. What is the Yield to Maturity on this bond? 3. Compute the value of a 12-year, semi-annual coupon bond that is priced to yield 14.00%. The bond carries a 12.00% coupon. If you hold this bond for five years, and the required return stays constant, at what price can you expect to sell the bond? 4. Consider the following bonds: One bond matures in 16 years and pays a 6.5 percent annual coupon. The second bond matures in 10 years and pays a 6.5 percent annual coupon. The required return on both bonds is 5.00 percent. If the market required return on both bonds rises to 7.00 percent, which bond will realize the biggest dollar change in market value? Why? 5 5. ARCO preferred stock has a $500 par value and pays an annual dividend of $50.00 per share. The current market required rate of return on the stock is 12.50%. What is the market value of a share of ARCO preferred stock