Hand in Assaments Rands (Due Now 12) Fill out the Answer Sheet on page 2 1. What is the price of a coupon bood with semiannual coupons that matures is 18 years Assume that the band has a discount rate of 8.4% and a par value of S1000 2. Consider a 20 year 8.4% semiannual coupon bond that sells for $1149.79 What is the Yield to Maturity of the Bond? Suppose that the bond can be called after 15 years (ie, in the beginning of the 16 year) with a call price of Sto . What is the yield to call. What is the current yield of the bond A 496 ten year band has a discount rate of 9.4% Ir the bond has a par value of S1000 and pays coupons semiannually, then what is the price of the bood? What is the yield to maturity and the current yield of an 896 semiannual coupon bond that matures in 9 years and sells for $946? A S1000 par value, 6% coupon bond that matures in November 2032 has an asked quoted price of 96.250. If there are 181 days between coupon payments and it has been 32 days since the last coupon payment, then what is the invoice (dirty price of the bond? 6. Consider the following three of Malkiel's Theorems: 1. Bond prices and bond yields move in opposite directions 2. For a given change in a bond's yield to maturity, the longer the term to maturity of the bond, the greater will be the magnitude of the change in the bond's price. For a given change in a bond's yield to maturity, the absolute magnitude of the resulting change in the bond's price is inversely related to the bond's coupon rate. Find the prices of the following bonds. The bonds have a par value of S1000 and pay semiannual coupons Assume that the interest rate drop from 10% to 9% occurs in one day so that the time to maturity of the bonds do not change. Bond Interest Rate 10% Interest Rate 9% Holding Period Retum At time 0 At time I From 0 to 1-1 10% coupon 2 year maturity 10% coupon 10 year maturity 10% coupon 20 year maturity Bond 10% Interest Rate At time 0 Interest Rate 9% At time 1 Holding Period Retum From t0to 1 Zero Coupon 10 year maturity 6% Coupon 10 year maturity 12% coupon 10 year maturity 7. Explain how Malkiel's theorems explain the changes in prices in the above tables