1) You are considering investing in a corporate bond rated A/A, with a coupon of 7.3%,semiannual. The bond matures in 8 years. Other A/A bonds maturing in 8 years have a yield tomaturity of 7.8%. You want to determine what you are willing to pay for this particular bond. 2) You still havent decided whether to purchase the bond you were considering in Question #1,and interest rates have changed. Other similar bonds are now yielding 8.2%. How much will

you offer for this bond if you decide to buy it today?

3) You didnt buy the bond in Question #1 last week, and now interest rates have moved again.Other similar bonds now yield 7.5%. If you decide to buy the bond today, what is the most you

will pay for it?

4) Your broker calls you up and wants to know if you are interested in buying an AA/Aa rated bondwhich matures in 15 years. The coupon on the bond is 6.7%, interest is paid semiannually, andthe price of the bond is 93% of par. Other similar bonds, AA/Aa rated and maturing in 15 years,

pay a yield to maturity of 7.45%. What do you tell your broker?

5) You had to wait for your year end bonus before you could actually make any investment. Nowyou have some extra cash to invest, and the bond you were looking at in Question #4 is nowquoted at 104%. Other similar bonds are trading at 6.5%. Do you want to buy the bond?

6) You want to invest in a preferred stock for your child. The XYZ preferred stock security you arelooking at pays a fixed dividend of $45 per year and has an A rating. Other single A ratedpreferreds yield 4.2%. How much will you be willing to pay for the XYZ preferred? 7) If market conditions change in a few years, and other single A rated preferred securities nowyield 4.7%, what will happen to the value of the XYZ preferred you bought for your child?