Instructions: You are required to use a financial calculator or spreadsheet (Excel) to solve 10 problems (provided on page 3) related to the risk and return, stocks and bonds valuation. You are required to show the following 3 steps for each problem (sample questions and solutions are provided for guidance):

(i) Describe and interpret the assumptions related to the problem.

(ii) Apply the appropriate mathematical model to solve the problem.

(iii) Calculate the correct solution to the problem.

PROBLEM:

4. ABC Company issued bonds on January 1, 2006. The bonds had a coupon rate of 5.0%, with interest paid semiannually. The face value of the bonds is $1,000 and the bonds mature on January 1, 2024. What is the yield to maturity for these bonds on January 1, 2016 if the market price of the bond on that date is $1,100?