Answer A and B

answer question A

FINC 3440 Principles of Finance HW2! Due: 10/14/2019 The homework intends to provide more practice on the questions on time value of money, interest rate, and bond valuation. Students are expected to utilize the financial calculator to finish the assignment. Correct solution should be found once correct information is input into the correct location of the calculator. A. Determinants of interest rate The real risk-free interest rate is 1.5% while the inflation premium is 3.5%, what will be the nominal risk-free rate? B. Bond Valuation Price: What is the clean price for a bond with coupon rate of 12%, time to maturity of 17 years if the YTM is 15%? 12%? 9%? Respectively? YTM: What is the yield to maturity for a bond with 11% coupon rate, time to maturity of 20 years and current price of $1,100? YTC: What is the yield to call for a bond with 11% coupon rate, time to maturity of 20 years, time to call of 10 years, call price of 106 and current price of $1,100? (Firm usually call when current interest rate lower than interest rate when originally issued.) Return and risk Forward looking: You have the following forward-looking table for mutual stock A and B