1. One of IBM's bond issues has an annual coupon rate of 3.9%, a face value of $1,000 and matures in 14 years. Part 1: What is the value of the bond if the required return is 5%? Part 2: What is the value of the bond if the required return is 6%?
2. A corporate bond has 19 years to maturity, a face value of $1,000, a coupon rate of 5.6% and pays interest semiannually. The annual market interest rate for similar bonds is 3% and is quoted as a semi-annually compounded simple interest rate, i.e 1.5% per 6-month period.What is the price of the bond?
3. If the yield to maturity is still 3.3% when you sell the bond at the end of year-5, what is your personalannual rateof return?

You bought a 10-year zero-coupon bond with a face value of $1,000 and a yield to maturity of 3.3% (EAR). You keep the bond for 5 years before selling it. F 1,000 The price of the bond today is Po = = 722.76 ( 1 + r )N 15 10 1.033