Galaxy Co. is an investment bank specialized in securitizing mortgages in to CDOs. The company recently purchased rights to collect following three mortgage payments from banks as follows. Semi-annual payment of $20,000, and a final lump-sum payment of $500,000 at year 10 Semi-annual payment of $15,000, and a final lump-sum payment of $350,000 at year 10 Semi-annual payment of $5,000, and a final lump-sum payment of $150,000 at year 10. Galaxy Co. firm combines the above three cash flows and securitizes it into thousand bonds with identical amount of coupon payments and FV = $1,000. This year's mortgage payments are already made, thus the payments will be made from year 1 to year 10. Round your answer to the nearest whole number. Do not write units ($. %). #1. What is the coupon rate of the bond, expressed in APR? #2. What is the price of this bond if we assume YTM of 2% expressed in APR ? #3. What is the price of this bond after an year if we assume YTM of 2% expressed in APR ? #4. Now, consider the case where mortgage and coupon payments are made quarterly, instead of semi-annually. The quarterly payments are simply half of the MacBook Air #1. What is the coupon rate of the bond, expressed in APR? #2. What is the price of this bond if we assume YTM of 2% expressed in APR ? #3. What is the price of this bond after an year if we assume YTM of 2% expressed in APR? #4. Now, consider the case where mortgage and coupon payments are made quarterly, instead of semi-annually. The quarterly payments are simply half of the original semi-annual payments. What is the price of this bond if we assume YTM of 4% expressed in APR? Blank # 1 A/ Blank # 2 Blank #3 Blank # 4 Page 18 of 18 Previous Page Next Page