1.You own a bond with the following features:

Face value of $1000,

Coupon rate of 5% (annual)

10 years to maturity.

The bond is callable after2 years with the call price of $1,074.

If the market interest rate is 3.52% in 2 years when the bond can be called, if the firm calls the bond, how much will it save or lose by calling the bond?

State your answer to the nearest penny (e.g., 84.25)

If there would be a loss, state your answer as a negative (e.g., -37.51)

2.What is the price of a bond with the following features?

• Face Value= $1,000
• Coupon Rate = 10% (stated as an ANNUAL rate)
• Semiannualcoupon payments
• Maturity = 6 years
• YTM = 5.75% (Stated as an APR)

State your answer to the nearest penny (e.g., 984.25)

3.Bond FeaturesMaturity (years)5Face Value =$1,000Coupon Rate =5.00%Coupon dates (Annual)Marketinterest rate today5.00%Time to call (years)3Price if Called$1,050.00Marketinterest rate in Year 32.00%

The above bond is callable in 3 years. When the bond is issued today, interest rates are 5.00% . In 3 years, the market interest rate is 2.00% . Should the firm call back the bonds in year 3 and if so, how much would the firm save or lose by calling back the bonds?

Group of answer choices

a)no it should not call back the bonds, it will lose $7.83

b)yes it should call back the bonds, it will save $8.49

c)yes it should call back the bonds, it will save $7.83

d)no it should not call back the bonds, it will lose $8.49

e)no it should not call back the bonds, it will lose $8.25

f)yes it should call back the bonds, it will save $8.25

4.LO2

Bond FeaturesMaturity (years) =5Face Value =$1,000Coupon Rate =3.00%Price=$900Coupon (Annual)

What is the YTM (annual) of the above bond?

Group of answer choices

a)5.30%

b)5.36%

c)5.33%

d)5.38%

e)4.80%

5.Bond FeaturesMaturity (years)5Face Value =$1,000Coupon Rate =3.00%Current Price=$1,100Coupon dates (Annual)Time to call (years)3Price if Called$1,030.00

What is the bond'syield to call (YTC)(annual) if the bond is called at its first possible date?

Group of answer choices

a)2.73%

b)0.63%

c)0.62%

d)-0.31%

e)2.75%

6.Use the bond term's below to answer the question

Maturity 6 years

Coupon Rate 5%

Face value $1,000

Annual Coupons

Market Interest Rate 4%

Assuming the YTM remains constant throughout the bond's life, what is percentage capital gains/loss between periods 5 and 6 ?

Group of answer choices

a)-0.98%

b)-1.00%

c)-0.95%

d)-0.92%

7.Assume you buy a bond with the following features

Bond maturity = 4

Coupon Rate = 4%

Face Value = $1,000

Annual Coupons

When you buy the bond the market interest rate = 3.45%

Immediately after you buy the bond the interest rate changes to 5.89%

What is the "reinvestment" effect in year 3 ?

8.Bond Features

Maturity (years) =

7

Face Value =

$1,000

Starting Interest Rate

4.33%

Coupon Rate =

4%

Coupon dates (Annual)

If interest rates change from 4.33% to 5.92% immediately after you buy the bond today (and stay at the new interest rate), what is the price effect in year 2 ?

State your answer to the nearest penny (e.g., 48.45)

If there is a loss, state your answer with a negative sign (e.g., -52.30)

9.Assume you buy a bond with the following features

Bond maturity = 4

Coupon Rate = 4%

Face Value = $1,000

Annual Coupons

When you buy the bond the market interest rate = 3.33%

Immediately after you buy the bond the interest rate changes to 5.03%

What is the "reinvestment" effect in year 3 ?

10.Bond Features

Maturity (years) =

9

Face Value =

$1,000

Starting Interest Rate

4.89%

Coupon Rate =

3%

Coupon dates (Annual)

If interest rates change from 4.89% to 5.48% immediately after you buy the bond today (and stay at the new interest rate), what is the price effect in year 5 ?

State your answer to the nearest penny (e.g., 48.45)

If there is a loss, state your answer with a negative sign (e.g., -52.30)

11.Assume you buy a bond with the following features

Bond maturity = 4

Coupon Rate = 4%

Face Value = $1,000

Annual Coupons

When you buy the bond the market interest rate = 4.12%

Immediately after you buy the bond the interest rate changes to 5.27%

What is the "reinvestment" effect in year 3 ?

12.Bond Features

Maturity (years) =

7

Face Value =

$1,000

Starting Interest Rate

3.81%

Coupon Rate =

4%

Coupon dates (Annual)

If interest rates change from 3.81% to 5.88% immediately after you buy the bond today (and stay at the new interest rate), what is the price effect in year 4 ?

State your answer to the nearest penny (e.g., 48.45)

If there is a loss, state your answer with a negative sign (e.g., -52.30)