Q8. PI

1.What is the price today (in dollars and cents) of a20-year zero coupon bond if the required rate of return is5.35%. The bond face value is $1000.

$__________

Place your answer in dollars and cents.

You should set your calculator for at least four decimal places of accuracy. I'll remind you of this from time to time but this is a working rule throughout the semester.

Do not include a dollar sign or comma in your answer. This is another rule that I'll remind you of but should be a working rule throughout the semester.

2. What is the price today (in dollars and cents) of a 3-year5.65% coupon rate bond that returns the par value of $1000 at maturity if the yield to maturity is10.50%?

$____________

You should set your calculator for at least four decimal places of accuracy. I'll remind you of this from time to time but this is a working rule throughout the semester.

Place your answer in dollars and cents.

Do not include a dollar sign or comma in your answer. This is another rule that I'll remind you of but should be a working rule throughout the semester.

3. What is the yield to maturity of a 5-year, 7.5% coupon rate $1000 par value bond priced currently at $1,010?

%____________

Place your answer in percentage form using two decimal places. Do not use the percent sign as part of your answer. For example, if your answer is five point nine nine percent, then submit your answer as 5.99

4. You are trying to price two bonds that have the same maturity and par value but different coupon rates and different required rates of return. Both bonds mature in 3 years and have par values of $1000. One bond has a coupon rate of 7% and a required rate of return of 7%. The other bond has a coupon rate of 5% and a required rate of return of 5%. What is the absolute value of the difference between the price of these two bonds?

$_____________

You should set your calculator for at least four decimal places of accuracy. I'll remind you of this from time to time but this is a working rule throughout the semester.

Place your answer in dollars and cents.

Do not include a dollar sign or comma in your answer. This is another rule that I'll remind you of but should be a working rule throughout the semester.

5. A bond with 2 years to maturity is priced today at $901.20. The bond's coupon payment is $80, and its par value is $1000. Which of the following comes closest to the bond's yield to maturity?

%___________

Place your answer in percentage form without the percentage sign. For example, an answer of four point four four percent should be entered 4.44 and not .044.