Please assume 3 decimal places for all calculations. Show all work and formulas.

Par = $100.

Chapter 1: A 20-year bond with a principal value of $1,000,000 was issued 5 years ago, has a coupon rate of 10% with interest paid semi-annually and is priced at $100: Please answer the following (1 point each, totaling 28 points):

1) Is the bond priced at a premium, discount or par dollar price?__________

2) What is the nominal rate of interest on the bond?__________

3) What is the real rate of interest assuming 3% inflation?__________

4) What is the tenor of the bond?__________

5) Is the bond a capital market security or money market security?__________

6) What is the coupon rate of the bond?__________

7) What is the yield to maturity of the bond?__________

8) What would the current yield of the bond be if it was priced at $105?__________

9) What is the semi-annual coupon payment received on the bond?__________

10) What is the legal contract that describes the form of the bond, the obligations of the issuer and the rights of bond holders?__________

11) When the bond matures in 20-years, ignoring the final coupon payment, what will the bondholder receive?__________

12) Is the bond a zero-coupon bond?(Yes or No)__________

13) If the bond had a call provision at par ($100) would this benefit the issuer or bondholder?__________

14) What are clauses that specify the rights of the bondholders and any actions that the issuer is obligated to perform or is prohibited from performing?__________

15) If this bond were issued by the United States government, is it considered a Special Legal Entity, Corporate Bond, or Sovereign Bond?__________

16) If this bond was issued by a corporation, such as Apple, what type of risk would result from the issuer failing to make full & timely payment of interest? Would it be interest rate risk, systemic risk or credit risk?__________

17) Current Yield Calculations: Coupon/Bond Price

a) Assume a Price of $100 (% of par):

b) Assume a Price of $95 (% of par):

c) Assume a Price of $105 (% of par):

18) Which entity would most likely be responsible for the timely payment of interest and repayment of principal to bondholders?__________