1) On October 5, 2015, you purchase a $13,000 T-note that matures on August 15, 2027 (settlement occurs two days after purchase, so you receive actual ownership of the bond on October 7, 2015). The coupon rate on the T-note is 4.378 percent and the current price quoted on the bond is 105.34375 percent. The last coupon payment occurred on May 15, 2015 (145 days before settlement), and the next coupon payment will be paid on November 15, 2015 (39 days from settlement).

a. Calculate the accrued interest due to the seller from the buyer at settlement. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)) .

Accrued interest due__________ $ ??

b. Calculate the dirty price of this transaction. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16)).

Dirty price______________$ ??

2)You can invest in taxable bonds that are paying a yield of 9.6 percent or a municipal bond paying a yield of 7.85 percent. Assume your marginal tax rate is 28 percent.

Calculate the after-tax rate of return on the taxable bond? (Round your answer to 2 decimal places.(e.g., 32.16))

Rate of return____________________

%

3) A municipal bond you are considering as an investment currently pays a yield of 6.77 percent.

a.	Calculate the tax equivalent yield if your marginal tax rate is 28 percent. (Round your answer to 3 decimal places. (e.g., 32.161))

Tax equivalent yield__%

b.	Calculate the tax equivalent yield if your marginal tax rate is 21 percent. (Round your answer to 3 decimal places. (e.g., 32.161))

Tax equivalent yield__%

4) A $2,000 face value corporate bond with a 5.30 percent coupon (paid semiannually) has 12 years left to maturity. It has had a credit rating of BB and a yield to maturity of 7.4 percent. The firm recently became more financially stable and the rating agency is upgrading the bonds to BBB. The new appropriate discount rate will be 6.5 percent. What will be the change in the bonds price in dollars and percentage terms? (Round your answers to 3 decimal places. (e.g., 32.161))

a. Change in the bonds price in dollars__________________	$
b. Change in the bonds price in percentage_______________	%

5) You plan to purchase an $80,000 house using a 30-year mortgage obtained from your local bank. The mortgage rate offered to you is 8.25 percent. You will make a down payment of 10 percent of the purchase price.

a.	Calculate your monthly payments on this mortgage. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Monthly payment______________________

$

b.	Calculate the amount of interest and, separately, principal paid in the 210th payment. (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))

Amount of interest_________________	$
Amount of principal_____________________	$

c.	Calculate the amount of interest and, separately, principal paid in the 240th payment. (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))

Amount of interest___________________	$
Amount of principal___________________	$

d.	Calculate the amount of interest paid over the life of this mortgage. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Amount of interest paid____________________

$

6) You plan to purchase a $220,000 house using a 15-year mortgage obtained from your local credit union. The mortgage rate offered to you is 7.5 percent. You will make a down payment of 10 percent of the purchase price.

a.	Calculate your monthly payments on this mortgage. (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Monthly payment_____________________

$

b.	Construct the amortization schedule for the first six payments. (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))

Amortization Schedule for first 6 payments (months)
Month	Beginning Loan Balance	Payment	Interest	Principal	Ending Loan Balance
1	$	$	$	$	$
2
3
4
5
6