F, G and H

11 12 An investor purchases a $135 million face amount of a corporate bond with remaining maturity of 28 years for 100.5 (no accrued interest). The coupon is 2.50%. The investor can invest cash at 1.0% annum, compounded semi-annually. The investor expects to sell the corporate bond in 1 year when yields are 2.00%. Settlement 12/14/21 Face Value $ 135,000,000.00 Currer 13 14 Maturity 12/13/49 Coupon Payment $ 1,687,500.00 15 (a) What is the dollar amount of the purchase price of the corporate bond? 16 $ 135,675,000.00 17 (b) What is the yield to maturity at the time of purchase? 18 1.23% 19 (c) What is the interest payment each period? How many periods until the bond is sold? 20 PMT 1687500 n= 56 21 (d) What is the expected selling price of the bond? 22 90.54 23 (e) What are the proceeds of the sale? 24 $ 12,222,710,522.02 25 (f) What is the future value of the coupon payments and reinvestment earnings at the time of the bond sale? 26 27 (g) What is the total cash from the bond sale, coupon payments and reinvestment earnings at the time of the bond sale? 28 29 (h) What is the total annualized rate of return, based on a semi-annual bond equivalent? 30 31