14 questions, Finance

1. Consider a bond with a 5.6 percent coupon rate and a yield to call of 6.5 percent. The bond currently sells for $1,096. If the bond is callable in 5 years, what is the call premium of the bond? (Do not round intermediate calculations. Round your final answer to 2 decimal places. Omit the "$" sign in your response.) Premium of the bond 2. A convertible bond has a 5 percent coupon, paid semiannually, and will mature in 15 years. If the bond were not convertible, it would be priced to yield 4 percent. The conversion ratio on the bond is 15 and the stock is currently selling for $60 per share. What is the minimum value of this bond? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Minimum value 3. A STRIPS with 13 years until maturity and a face value of $10,000 is trading for $7,245. What is the yield to maturity? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) Yield to maturity 4. A 5,000 par value municipal bond with a coupon rate of 2.7 percent has a yield to maturity of 3.7 percent. If the bond has 12 years to maturity, what is the price of the bond? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Price of the bond 5. A municipal bond has 6 years until maturity and sells for $5,603.63. The coupon rate on the bond is 6.82 percent and the bond is callable in 3 years. What is the yield to call if the call price is 110 percent of par? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) Yield to call 6. A Treasury issue is quoted at 121:21 bid and 121:25 ask. What is the least you could pay to acquire a bond? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Price 7. A noncallable Treasury bond has a quoted yield of 5.28 percent. It has a 6.25 percent coupon and 15 years to maturity. a. What is its dollar price assuming a $1,000 par value? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Dollar price $ b. What is its quoted price? Quoted price 8. A Treasury bond with a maturity of 30 years has an ask price quoted at 147:12. The coupon rate is 5.9 percent, paid semiannually. What is the yield to maturity of this bond? 9. A STRIPS traded on April 1 2011, matures in 18 years on April 1 2029. Assuming a 4.6 percent yield to maturity, assume a face value of $100. What is the STRIPS price? 10. You have decided to buy a house. You can get a mortgage rate of 3.65 percent, and you want your payments to be $880 or less. How much can you borrow on a 25-year fixed-rate mortgage? Mortgage amount 11. $ A 30-year, $225,000 mortgage has a rate of 5.6 percent. a. What are the interest and principal portions in the first payment? (Round your answers to 2 decimal places. Omit the "$" sign in your response.) Interest Principal $ $ b. What are the interest and principal portions in the second payment? (Round your answers to 2 decimal places. Omit the "$" sign in your response.) Interest Principal $ 12. A homeowner takes a 35-year fixed-rate mortgage for $240,000 at 4.8 percent. After 7 years, the homeowner sells the house and pays off the remaining principal. How much is the principal payment? Principal payment $ 13. Consider a 25-year, $195,000 mortgage with a 7.1 percent interest rate. After 6 years, the borrower (the mortgage issuer) pays it off. How much will the lender receive? Lender receive $ 14. Assume a 30-year, $405,000 mortgage with a rate of 6.3 percent. 9 years into the mortgage, rates have fallen to 5.3 percent. What would be the monthly saving to a homeowner from refinancing the outstanding mortgage balance at the lower rate? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.) Savings