Problem $1$

A portfolio manager is considering the purchase of a bond with a $7\mathrm{.}10\%$ coupon rate that pays

interest annually and matures in twelve years.

a$.$ If the required rate of return on the bond is $5\mathrm{.}80\%,$ what is the price of the bond per $100$ of

par value. Provide the answer to three decimal places.

b$.$ What is the current yield of this bond? Provide the answer $($as a percentage$)$ to three decimal

places.

Problem $2$

A Treasury bill with $214$ days to maturity would cost the buyer $$97,200$ for a face value of

$$100,000.$ What is the discount yield $($to $3$ decimal places$)$ of this T$-$bill?

Problem $3$

a$.$ What is the price of a $4-$year, annual$-$pay bond with a coupon of $5\mathrm{.}80\%,$ given spot $($zero$)$

rates as follows:

$3\mathrm{.}800\%$ for $1$ year

$*4\mathrm{.}600\%$ for $2$ years

$*4\mathrm{.}800\%$ for $3$ years

$*4\mathrm{.}900\%$ for $4$ years

b$.$ What is the yield to maturity of this bond?

Problem $4$

You are given the following information about a semi$-$annual coupon bond with a total

investment par value of $$10,000$ :

The settlement date for the transaction is October $13,2024$

The bond matures on December $15,2032,$ which represents a term of $8\mathrm{.}178$ years

The coupon rate is $5\mathrm{.}10\%$

The yield to maturity is $5\mathrm{.}81\%$

The day count convention for this bond is US $30/360.$

a$.$ Calculate the full price using the calculator on the basis of a $100$ par value for the bond.

$($Provide three decimal places.$)$ Use the method as shown in the class. $($That is$,$ calculate the

price for the last full$/$integer period and then inflate that value to the settlement date.$)$

b$.$ Calculate the accrued interest for the bond.

c$.$ What is the flat price $($or "clean price"$)$ of the bond at settlement?