1)

Compute the price of a 4.9 percent coupon bond with 15 years left to maturity and a market interest rate of 7.6 percent. (Assume interest payments are semiannual.)(Do not round intermediate calculations and round your finalanswer to 2 decimal places.)

Bond price

$

2)

A corporate bond with a 6.850 percent coupon has twelve years left to maturity. It has had a credit rating of BB and a yield to maturity of 8.4 percent. The firm has recently become more financially stable and the rating agency is upgrading the bonds to BBB. The new appropriate discount rate will be 7.3 percent.

What will be the change in the bonds price in dollars? (Assume interest payments are semiannual.)(Do not round intermediate calculations and round your final answer to 2 decimal places.)

Change in bond price

$

What will be the change in the percentage terms?(Do not round intermediate calculations andround your final answer to 2 decimal places.)

Change in bond percent

%

3)

A 6.35 percent coupon bond with 20 years left to maturity is offered for sale at $1,105.25. What yield to maturity is the bond offering? (Assume interest payments are semiannual.)(Round your answer to 2 decimal places.)

Yield to maturity

%

4)

Consider a 4.50 percent TIPS with an issue CPI reference of 197.6. The bond is purchased at the beginning of the year (after the interest payment), when the CPI was 205.5. For the interest payment in the middle of the year, the CPI was 207.1. Now, at the end of the year, the CPI is 211.6 and the interest payment has been made.

What is the total return of the TIPS in dollars?(Do not round intermediate calculations and round your final answer to 2 decimal places.)

Total return

$

What is the total return of the TIPS in percentage?(Do not round intermediate calculations and round your final answer to 2 decimal places.)

Total return

%

5)

Problem 7-36 Bond Prices and Interest Rate Changes (LG5)

A 8.6 percent coupon bond with 17 years left to maturity is priced to offer a 6.80 percent yield to maturity. You believe that in one year, the yield to maturity will be 7.5 percent.

What would be the total return of the bond in dollars?(Do not round intermediate calculations and round your final answer to 2 decimal places.)

Total return

$

What would be the total return of the bond in percentage?(Do not round intermediate calculations and round your final answer to 2 decimal places.)

Total return

%

6)

Consider the following three bond quotes: a Treasury note quoted at 99:15, a corporate bond quoted at 103.30, and a municipal bond quoted at 101.95. If the Treasury and corporate bonds have a par value of $1,000 and the municipal bond has a par value of $5,000, what is the price of these three bonds in dollars?(Do not round intermediate calculations and round your finalanswers to 2 decimal places.)

Treasury note	$
Corporate bond	$
Municipal bond	$