Finance 325: Chapter 7 Homework All bonds are semi-annual. All yield measures are stated as annual percentage rates.

1. Suppose you buy a 2 year 5% bond that has a yield to maturity (YTM) of 6%. What is the price of the bond?

2. Suppose you buy a 3 year 6% bond that has a YTM of 5%. What is the price of the bond?

3. Suppose you buy a 10 year 9% bond that has a YTM of 11%. What is the price of the bond?

4. Suppose you buy a 30 year 7% bond that has a YTM of 7.5%. What is the price of the bond?

5. Suppose you buy a 6 year 12% bond that has a YTM of 9%. What is the price of the bond?

6. Suppose you buy a 30 year bond that pays a 6% coupon for the first 15 years and a 8% coupon for the last 15 years. The YTM of this bond is 7%. What is the price of the bond?

7. What is the YTM of a 5 year 8% bond that is currently selling for $1050?

8. What is the YTM of a 10 year 6% bond that is currently selling for $940?

9. What is the YTM of a 7.5 year 12% bond that is currently selling for $1100?

10. What is the yield to call (YTC) of a 30 year 8% bond selling for $940? The call deferment period for the bond is 10 years.

11. What is the yield to call (YTC) of a 20 year 9% bond selling for $1030? The call deferment period for the bond is 5 years.

12. What is the holding period yield on a 30 year 7% bond that we buy for $1020. We sell the bond in 4 years for $1040.

13. Suppose you bought a 10 year 8% bond for $975. If you sold the bond for $940 after holding it for 2 years, what was your holding period yield?