A company's bonds have $21$ years remaining until maturity. Interest is paid annually, they have a $$1000$ par value, the coupon rate is $7\mathrm{.}5\%,$ and the yield to maturity is $13\mathrm{.}1\%.$ What is the bond's current market price? $$604\mathrm{.}75$

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$$604\mathrm{.}75$

Question $5$

$12$

Points

A bond has a $$1000$ par value, $9$ years to maturity, a $10\%$ annual coupon, and sells for $$1150.$

a$.$ What is its yield to maturity? $7\mathrm{.}64$

b$.$ If this bond paid its coupon semiannually, what would the yield to maturity be$?7\mathrm{.}66$

c$.$ If the coupon is annual, and the yield to maturity remains constant for $5$ years, what will the price be $5$ years from today? $1078\mathrm{.}7967$

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$7\mathrm{.}64$

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$7\mathrm{.}66$

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$1078\mathrm{.}7967$

Question $6$

$4$

Points

An outstanding bond has a $$1000$ par value, a $6\mathrm{.}5\%$ semiannual coupon, $13$ years to maturity, and an $8\%$ YTM$.$ What is the bond's current price? $880\mathrm{.}13$

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$880\mathrm{.}13$

Question $7$

$10$

Points

A firm's bonds have a maturity of $10$ years, with a $$1000$ face value, a $9\%$ annual coupon, are callable in $5$ years at $$1175,$ and currently sell at a price of $$1322\mathrm{.}89.$

a$.$ What is the nominal yield to maturity $($YTM$)?4\mathrm{.}85$

b$.$ What is the nominal yield to call $($YTC$)?4\mathrm{.}77$

c$.$ Should investors expect to earn YTM or YTC$?$ Investors should expect to earn to earn YTC$.$ This is because YTM $>$ YTC$.$ Therefore investors would expect YTC$.$

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$4\mathrm{.}85$

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$4\mathrm{.}77$

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Investors should expect to earn to earn YTC$.$ This is because YTM $>$ YTC$.$ Therefore investors would expect YTC$.$

Use the "Expected Return" tab of the attached Excel workbook to answer questions $8-10.$

Question $8$

$5$

Points

For Investment X $($all answers should be rounded to $2$ decimal places, except for Sharpe ratios which should be rounded to $4$ decimal places$)$:

a$.$ What is the total expected return? Blank $1$

b$.$ What is the standard deviation? Blank $2$

c$.$ What is the CV$?$ Blank $3$

d$.$ What is the Sharpe ratio? Blank $4$

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Question $9$

$5$

Points

For Investment Z $($all answers should be rounded to $2$ decimal places, except for Sharpe ratios which should be rounded to $4$ decimal places$)$:

a$.$ What is the total expected return? Blank $1$

b$.$ What is the standard deviation? Blank $2$

c$.$ What is the CV$?$ Blank $3$

d$.$ What is the Sharpe ratio? Blank $4$

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Question $10$

$2$

Points

Between Investment X and Investment Z$,$ which product do you prefer to invest in and why?