• 1. You bought a $1,000 NYC 10 year bond with equal annual amortization.
  • a) How much principal will you receive each year?
  • b) If the coupon rate is 3%/year, how much interest will you receive in year 1 and year 2?
• 2. You bought a $1,000 Intel Corp bond that is callable after 3 years at 101.
  • a) When is Intel likely to call the bond? When rates go up, or when rates go down?
  • b) If Intel calls the bond in 2020, how much principal will you receive?
• 3. You bought a convertible bond issued by HiTechInc which has a conversion ratio of 50 common shares for each $1,000 bond.
  • a) At what stock price would you be "in the money?"
  • b) What would you expect the bond to sell for in the market if the stock trades at $32?