Q1: 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, 7 years to maturity, and a coupon rate of 8.8 percent paid annually. If the YTM is 10.8 percent, what is the current bond price in euros?

Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.

Q2: Nikita Enterprises has bonds on the market making annual payments, with 18 years to maturity, a par value of $1,000, and selling for $965. At this price, the bonds yield 7.7 percent. What must the coupon rate be on the bonds?

Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.

Q3:If Treasury bills are currently paying 6.45 percent and the inflation rate is 1.4 percent, what is the approximate and the exact real rate of interest?

Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.

Q4: Suppose the real rate is 3.8 percent and the inflation rate is 1.4 percent. What rate would you expect to see on a Treasury bill?

Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.

Q5: An investment offers a total return of 15 percent over the coming year. Janice Yellen thinks the total real return on this investment will be only 7.2 percent. What does Janice believe the inflation rate will be over the next year?

Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.

Q6: Say you own an asset that had a total return last year of 17 percent. Assume the inflation rate last year was 4.8 percent. What was your real return?

Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.

Q7:Union Local School District has bonds outstanding with a coupon rate of 3.6 percent paid semiannually and 12 years to maturity. The yield to maturity on these bonds is 2.4 percent and the bonds have a par value of $5,000. What is the dollar price of the bonds?

Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.

Q8: Uliana Company wants to issue new 22-year bonds for some much-needed expansion projects. The company currently has 10.2 percent coupon bonds on the market that sell for $1,142, make semiannual payments, have a par value of $1,000, and mature in 22 years. What coupon rate should the company set on its new bonds if it wants them to sell at par?

Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.

Q9: Bond P is a premium bond with a coupon rate of 8.3 percent. Bond D is a discount bond with a coupon rate of 4.3 percent. Both bonds make annual payments, a YTM of 6.3 percent, a par value of $1,000, and have eight years to maturity.

What is the current yield for Bond P? For Bond D?

Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.

If interest rates remain unchanged, what is the expected capital gains yield over the next year for Bond P? For Bond D?

Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.