1. Given an interest rate of 12% per year, what is the present value of a perpetual stream of $1,000 payments with the first payment beginning in 4 years?

2. Play Store Co. issued 10-year bonds one year ago at a coupon rate of 2.4%. The bonds makemonthlypayments. If the YTM on these bonds is 4.8%, what is the current bond price?

3. You purchase a bond with an invoice price of $920. The bond has a coupon rate of 8.6%, semiannual coupons, and there are three months to the next coupon date. What is the clean price of the bond?

4. What is the price of the followingquarterlybond?

Face value: maturity: coupon rate: YTM:

1,000 10 years 10%

8%

5. Volbeat Corporation has bonds on the market with 30 years to maturity, a YTM of 6.2%, and a current price of $924. The bonds makesemiannualpayments. What must the annual coupon rate be on the bonds?

Present Value:

Annuity:

=1

Annuity Due:

EAR & APR:

=;=

1

(1 + )

;

=

1 1

(1 + )

;

=[() ( )] (1 + )

(1 + )

(1 + )

(1 + )

=1+ 1;

=(1+)1

=1

1

(1 + )

Coupon bond price:

whereis the frequency of coupon payments in a year andis the bond maturity in years.

= () + ( ).1

=1 + 1 +

,1