Problem 7-3 Valuing Bonds [LO2]

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of 1,000, 15 years to maturity, and a coupon rate of 6.9 percent paid annually.

Japanese company has a bond outstanding that sells for 94 percent of its 100,000 par value. The bond has a coupon rate of 5.3 percent paid annually and matures in 15 years.

What is the yield to maturity of this bond? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Sqeekers Co. issued 14-year bonds a year ago at a coupon rate of 8.6 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 6.9 percent, what is the current bond price? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

Investment X offers to pay you $6,000 per year for 9 years, whereas Investment Y offers to pay you $8,200 per year for 5 years.

If the discount rate is 8 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	Present value
Investment X	$
Investment Y	$

If the discount rate is 23 percent, what is the present value of these cash flows? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	Present value
Investment X	$
Investment Y	$

References WorksheetProblem 6-2 Present Value and Multiple Cash Flows [LO 1]

If the yield to maturity is 8 percent, what is the current price of the bond? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Find the EAR in each of the following cases (Use 365 days a year. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.):

Stated Rate (APR)		Number of Times Compounded		Effective Rate (EAR)
	8.6	%			Quarterly			%
	17.6				Monthly
	13.6				Daily
	10.6				Infinite