1.Assume that a 15-year semi-annual, 8% bond is callable after 10 years at 105% of par value and the discount rate in today's market is 6%. Using the price-to-worst method, what is the value of this bond?

$1,209

$1,176

$1,314

$1,000

$1,089

2.Which of the following scenario's is most likely to result in a bond being called?

20-year bond with 2 remaining 8% coupon payments in a 7% interest rate environment

10-year bond with 18 remaining 8% coupon payments in a 8% interest rate environment

10-year bond with 18 remaining 8% coupon payments in a 10% interest rate environment

10-year bond with 18 remaining 8% coupon payments in a 6% interest rate environment

20-year bond with 2 remaining 8% coupon payments in a 9% interest rate environment

3.Value a 20-yr semi-annual, non-callable bond that pays coupons of 6% assuming market interest rates are 6%.

$989

$1,000

$355

$1,455

$802

4.Given the following information, calculate the present value of the following bond that pays semi-annual coupons. Par value: $1,000. Coupon Rate: 7%. Interest Rate: 9%. Maturity:5 years.

$1,149

$804

$864

$1,000

$921

5.If you bought a stock for $75 and sold it for $105 after a year, you also received a dividend of $10 in that year. What was the RETURN you received over the year?

-11.8%

-15.0%

45.0%

10.0%

53.3%

6.Calculate value of a perpetuity with even annual cash flows of $20,000 with 8% discount rate.

$210,000

$250,000

$211,664

$108,000

$233,280