Problem 6-4 Bond Yields [LO 2]

The Timberlake-Jackson Wardrobe Co. has 11.2 percent coupon bonds on the market with eleven years left to maturity. The bonds make annual payments.

Required:

If the bond currently sells for $1,157.26, what is its YTM? (Do not round intermediate calculations.Round your answer to 2 decimal places (e.g., 32.16).)

Yield to maturity

%

Problem 6-8 Coupon Rates [LO 2]

Volbeat Corporation has bonds on the market with 16 years to maturity, a YTM of 10.5 percent, and a current price of $943. The bonds make semiannual payments.

Required:

What must the coupon rate be on the bonds? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Coupon rate

%

Problem 6-9 Calculating Real Rates of Return [LO 4]

If Treasury bills are currently paying 6.35 percent and the inflation rate is 1.6 percent, what is the approximate and the exact real rate of interest? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

Approximate	%
Exact	%

Problem 6-11 Nominal and Real Returns [LO 4]

An investment offers a total return of 13 percent over the coming year. Bill Bernanke thinks the total real return on this investment will be only 8.5 percent.

Required:

What does Bill believe the inflation rate will be over the next year? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Inflation rate

%