1. What is the Yield to Maturity (YTM) of a bond which can be bought today for $10,414.63? The bond has a face value of $10,000. It pays coupons semi-annually at an annual rate of 11.50% per annum and it will mature in exactly 7 years. (2 marks)

HINT: First, compute the YTM by multiplying the periodic rate by the coupon frequency. Second, convert this rate to an effective annual rate.

2. The ABC Corporation issued 12-year bonds on 29 April 2010. Each of these bonds has a face value of $10,000 and they are currently trading at a yield of 10.66% per annum. The bonds pay quarterly coupons at an annual rate of 7.75% per annum.

(a) Compute the price of each bond of the ABC Corporation on the settlement date (29-Dec-2014). This is the "clean price", excluding any accrued interest. Please use Actual/Actual as the interest rate basis. (3 marks)

(b) Use Goal Seek to find the Yield to Maturity (YTM) that would justify a price of exactly $9,000 for each of these bonds. Outline the steps you have used to obtain the answer. (2 marks)

3. A bond with a face value of $100,000 and coupon interest paid semi-annually at an annual rate of 8.50% per annum was issued on 26 April 2013 for 4 years. Similar bonds are now selling at a yield-to-maturity of 8.01% per annum. Based on the most recent and next coupon dates, work out the accrued interest on the settlement date (12-Feb-2015). Please use Actual/Actual as the interest rate basis and leave the Calc_method as its default. (4 marks)

PLEASE PROVIDE ANSWERS IN EXCEL FILE.