I would appreciate it if you can please advise me on how I can use my financial calculator to solve these problems. Thank you so much!
Both Bond Sam and Bond Dave have 6 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 4 years to maturity, whereas Bond Dave has 16 years to maturity. (Do not round your intermediate calculations.) Requirement 1: (a) If interest rates suddenly rise by 5 percent, what is the percentage change in the price of Bond Sam? (b) If interest rates suddenly rise by 5 percent, what is the percentage change in the price of Bond Dave? Requirement 2: (a) If rates were to suddenly fall by 5 percent instead, what would the percentage change in the price of Bond Sam be then? (b) If rates were to suddenly fall by 5 percent instead, what would the percentage change in the price of Bond Dave be then? Seether Co. wants to issue new 13-year bonds for some much-needed expansion projects. The company currently has 9.4 percent coupon bonds on the market that sell for $956.87, make semiannual payments, and mature in 13 years. What coupon rate should the company set on its new bonds if it wants them to sell at par? 9.90% 10.00% 5.00% 10.30% 9.70% An investment offers a 9 percent total return over the coming year. Bill Bernanke thinks the total real return on this investment will be only 4 percent. What does Bill believe the inflation rate will be over the next year? 6.25% 4.81% -4.59% 5.53% 3.37% Ngata Corp. issued 21-year bonds 2 years ago at a coupon rate of 9.9 percent. The bonds make semiannual payments. If these bonds currently sell for 101 percent of par value, what is the YTM? 11.74% 9.78% 10.76% 4.89% 8.80% Ackerman Co. has 10 percent coupon bonds on the market with thirteen years left to maturity. The bonds make annual payments. If the bond currently sells for $1,334.64, what is its YTM? rev: 04-29-2011 16.36% 11.26% 6.18% 14.36% 9.07% Suppose the real rate is 9 percent and the inflation rate is 1 percent. What rate would you expect to see on a Treasury bill? 11.60% 10.09% 8.58% 11.10% 9.08% Kiss the Sky Enterprises has bonds on the market making annual payments, with 12 years to maturity, and selling for $900. At this price, the bonds yield 7.5 percent. What must the coupon rate be on the bonds? 12.41% 6.31% 6.21% 6.90% 7.50% Say you own an asset that had a total return last year of 15 percent. If the inflation rate last year was 5 percent, what was your real return? 9.72% 9.42% 9.52% 9.62% -8.70% You want to have $3.5 million in real dollars in an account when you retire in 50 years. The nominal return on your investment is 9 percent and the inflation rate is 4.5 percent. What real amount must you deposit each year to achieve your goal? (Do not round your intermediate calculations.) $20,840.12 $4,294.04 $21,882.12 $21,673.72 $19,798.11 Ashes Divide Corporation has bonds on the market with 18 years to maturity, a YTM of 9.2 percent, and a current price of $1,166.50. The bonds make semiannual payments. What must the coupon rate be on these bonds? (Do not round your intermediate calculations.) 11.21% 22.25% 11.11% 9.52% 19.08%
