Please answer the following time value of money questions below. Charting out each of the problem elements (ex. N = 10, PV = 500, etc.) will not only help you in answering the questions but will also assist me in following your calculations Calculate the value of a bond with a coupon rate of 7.5% and market interest rate of 9% that matures in 12 years. 1. 2. What is the value of the bond in question 1 if the market interest rate decreases to 6.5%? What would you call this kind of bond? What is the value of the bond in question 1 if the market interest rate increases to 11%? What would 3. you call this kind of bond? You just purchased an outstanding 20-year bond with a par value of $1,000 for $1,095. Its annual coupon is $60. Calculate the bond's yield to maturity. 4. You just purchased an outstanding 20-year bond with a par value of $1,000 for $1,095. Its annual coupon payment is $60. What is the yield to call if the bond is callable in 5 years at a price of $1,060? 5. You have been offered the opportunity to purchase a non-callable bond with a $100 annual coupon at a market rate of 7% that matures in 15 years. What is the most you should pay for this bond? 6. 7. What is the current price of a bond with an 8% semiannual coupon at a market rate of 6% that matures in 10 years? What is the yield to maturity of a bond with a 7% semiannual coupon, a current price of $1,200, that matures in 15 years? 8. 9. Last year you purchased a bond with a 6% semiannual coupon with a market rate of 8% that matures in 20 years. Today, 1 year later, the market rate has increased to 10%. What is the percentage change in bond value from last year to today? 10. Two years ago you purchased a bond with a 6% semiannual coupon with a market rate of 8% that matures in 20 years. Today, the market rate has decreased to 6.5%. What is the percentage change in bond value from two years ago to today? Please answer the following time value of money questions below. Charting out each of the problem elements (ex. N = 10, PV = 500, etc.) will not only help you in answering the questions but will also assist me in following your calculations Calculate the value of a bond with a coupon rate of 7.5% and market interest rate of 9% that matures in 12 years. 1. 2. What is the value of the bond in question 1 if the market interest rate decreases to 6.5%? What would you call this kind of bond? What is the value of the bond in question 1 if the market interest rate increases to 11%? What would 3. you call this kind of bond? You just purchased an outstanding 20-year bond with a par value of $1,000 for $1,095. Its annual coupon is $60. Calculate the bond's yield to maturity. 4. You just purchased an outstanding 20-year bond with a par value of $1,000 for $1,095. Its annual coupon payment is $60. What is the yield to call if the bond is callable in 5 years at a price of $1,060? 5. You have been offered the opportunity to purchase a non-callable bond with a $100 annual coupon at a market rate of 7% that matures in 15 years. What is the most you should pay for this bond? 6. 7. What is the current price of a bond with an 8% semiannual coupon at a market rate of 6% that matures in 10 years? What is the yield to maturity of a bond with a 7% semiannual coupon, a current price of $1,200, that matures in 15 years? 8. 9. Last year you purchased a bond with a 6% semiannual coupon with a market rate of 8% that matures in 20 years. Today, 1 year later, the market rate has increased to 10%. What is the percentage change in bond value from last year to today? 10. Two years ago you purchased a bond with a 6% semiannual coupon with a market rate of 8% that matures in 20 years. Today, the market rate has decreased to 6.5%. What is the percentage change in bond value from two years ago to today
