1

FV = $100

Price = $90.28

Coupon Rate = 6.5%

Term =5 years

Given the information above calculate the yield to maturity (YTM).

2. What is the price today of a zero coupon bond with a face value of $4,000 if the relevant market yield is 9% pa and with 2 years to maturity? Calculate the price to the nearest dollar.

3. Polycorp wishes to issue a 90 day bank bill with a face value of $4,000,000. If the current 90 day rate is 8% how much will Polycorp issue the bill for. Calculate to the nearest dollar.

4.A non-redeemable preference share is paying a constant dividend of $9. What is the current price if the market yield for such shares is 9 %? Your answer should be calculated to the nearest cent, e.g. 23.167 should be entered as 23.17.

5.

Polycorp is about to issue debentures. The following information is available.

1.The coupon rate is 8% pa (or .08). Coupons are paid annually

2.The yield to maturity (YTM) is 0.08 pa

3.The face value is $100

4.The term is 3 years

How much can the debentures be issued for? Your answer should be accurate to the nearest cent.Notethat the YTM is expressed as a decimal, so .06 is 6% pa.