6. A 10-year, 12% semiannual coupon bond with a par value of $1000 may be called in four

years at a call price of $1,060. The bond sells for $1,100. Assume that the bond has just been

issued.

What is the bonds yield to call? (Round Your Answer as a Percentage with 2 Decimal Places, For

Example: X.XX%)

7. Onions Tatlow Enterprises is considering a capital project that has a one year life and project

returns dependent on the state of the economy. The estimated rates of return are shown

below:

STATE OF

THE ECONOMY

Boom

Normal

Recession

PROBABILITY

OF EACH STATE

OCCURRING

.20

.40

.40

RATES OF RETURN

IF STATE OCCURS

20%

10

-8

What is the projects expected return? (Round Your Answer as a Percentage with 2 Decimal

Places, For Example: X.XX%)

8. Onions Tatlow Enterprises is considering a capital project that has a one year life and project

returns dependent on the state of the economy. The estimated rates of return are shown

below:

STATE OF

THE ECONOMY

Boom

Normal

Recession

PROBABILITY

OF EACH STATE

OCCURRING

.20

.40

.40

RATES OF RETURN

IF STATE OCCURS

20%

10

-8

What is the projects standard deviation? (Round Your Answer as a Percentage with 2 Decimal

Places, For Example: X.XX%)

9. Onions Tatlow Enterprises is considering a capital project that has a one year life and project

returns dependent on the state of the economy. The estimated rates of return are shown

below:

STATE OF

THE ECONOMY

Boom

Normal

Recession

PROBABILITY

OF EACH STATE

OCCURRING

.20

.40

.40

RATES OF RETURN

IF STATE OCCURS

20%

10

-8

What is the projects Coefficient of Variation? (Round Your Answer to 2 Decimal Places)

10. The Geezer Keyes Company is considering two capital projects that have a one year life and

project returns dependent on the state of the economy. The estimated rates of return are

shown below:

STATE OF

THE ECONOMY

PROBABILITY

OF EACH STATE

OCCURRING

Boom

Normal

Recession

.20

.40

.40

Expected Return

Standard Deviation

6.80%

2.64%

RATES OF RETURN

IF STATE OCCURS

A

4%

5%

10 %

B

25%

12%

-2%

9.00%

10.12%

What is the covariance of the returns for projects A and B? (Round Your Answer as a Percentage

with 2 Decimal Places, For Example: X.XX%)