1.Microhard has issued a bond with the following characteristics:

Par: $1,000

Time to maturity: 18 years

Coupon rate: 6 percent

Semiannual payments

Calculate the price of this bond if the YTM is(Do not round intermediate calculations. Round the finalanswersto 2 decimal places. Omit $ sign in your response.)

Price of the Bonda.6 percent$b.9 percent$c.3 percent$

2.Watters Umbrella Corp. issued 12-year bonds four years ago at a coupon rate of 9.6 percent. The bonds make semiannual payments.

If these bonds currently sell for 123.4 percent of par value, what is the YTM?(Do not round intermediate calculations. Round the final answer to 2 decimal places.)

YTM%

3.Rhiannon Corporation has bonds on the market with 21.5 years to maturity, a YTM of 6.8 percent, and a current price of $1,045. The bonds make semiannual payments.

What must the coupon rate be on these bonds?(Do not round intermediate calculations. Round the final answer to 2 decimal places.)

Coupon rate%

Even though most corporate bonds in Canada and the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of 1,000, 16 years to maturity, and a coupon rate of 8.7 percent paid annually.

If the yield to maturity is 6.85 percent, what is the current price of the bond?(Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit sign in your response.)

Current price of the bond

5.A Japanese company has a bond outstanding that sells for 91 percent of its 100,000 par value. The bond has a coupon rate of 5 percent paid annually and matures in 12 years.

What is the yield to maturity of this bond?(Do not round intermediate calculations. Round the final answer to 2 decimal places.)

Yield to maturity%

6.Miller Corporation has a premium bond making semiannual payments. The bond pays an 10 percent coupon, has a YTM of 8 percent, and has 16 years to maturity. The Modigliani Company has a discount bond making semiannual payments. This bond pays a 8 percent coupon, has a YTM of 10 percent, and also has 16 years to maturity.(Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.)

If interest rates remain unchanged, what do you expect the price of these bonds to be 1 year from now? 7 years? 12 years? 14 years? 16 years?

Price of bondMiller Corporation BondModigliani Company BondOne year$$7 years$$12 years$$14 years$$16 years$$

7.Laurel Inc. and Hardy Corp. both have 6 percent coupon bonds outstanding, with semiannual interest payments, and both are priced at par value. The Laurel Inc. bond has 5 years to maturity, whereas the Hardy Corp. bond has 18 years to maturity.(Do not round intermediate calculations. Round the final answers to 2 decimal places.)

If interest rates suddenly rise by 2 percent, what is the percentage change in the price of these bonds?(Negative answers should be indicated by a minus sign.)

Percentage change in price of Laurel%Percentage change in price of Hardy%

If interest rates were to suddenly fall by 2 percent instead, what would the percentage change in the price of these bonds be then?

Percentage change in price of Laurel%Percentage change in price of Hardy%

8.Hacker Software has 11.0 percent coupon bonds on the market with nineteen years to maturity. The bonds make semiannual payments and currently sell for 108.3 percent of par.

What is the current yield on the bonds?(Do not round intermediate calculations. Round the final answers to 2 decimal places.)

Current yield%

What is the YTM?

YTM%

What is the effective annual yield?

Effective annual yield%

9.BondPis a premium bond with a 12 percent coupon. BondDis a 7 percent coupon bond currently selling at a discount. Both bonds make annual payments, have a YTM of 9 percent, and have 7 years to maturity.

What is the current yield for bondPand bondD?(Do not round intermediate calculations. Round the final answers to 2 decimal places.)

Current YieldBondP%BondD%

If interest rates remain unchanged, what is the expected capital gains yield over the next year for bondPand bondD?(Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round the final answers to 2 decimal places.)

Capital Gains YieldBondP%BondD%

10.The YTM on a bond is the interest rate you earn on your investment if interest rates don't change. If you actually sell the bond before it matures, your realized return is known as the holding-period yield (HPY).(Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.)

a.Suppose that today you buy a 8 percent annual coupon bond for $1,030. The bond has 17 years to maturity. What rate of return do you expect to earn on your investment?

Expected rate of return%

b-1.Two years from now, the YTM on your bond has declined by 1 percent, and you decide to sell. What price will your bond sell for?

Bond price$

b-2.What is the HPY on your investment?

HPY%

11.The Morgan Corporation has two different bonds currently outstanding. Bond M has a face value of $30,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $1,400 every six months over the subsequent eight years, and finally pays $1,300 every six months over the last six years. Bond N also has a face value of $30,000 and a maturity of 20 years; it makes no coupon payments over the life of the bond. The required return on both these bonds is 10 percent compounded semiannually.

What is the current price of Bond M and Bond N?(Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.)

Current PriceBond M AND BOND N