Question 6

Jackson bought a 10-year, $1,000 PAR coupon bond today. Annual coupon rate is 10%. Coupons are paid 1 times in a year. Jackson was hoping for a YTM of 10% on this Bond. Few hours after purchasing this bond, a very bad economic event occurred and all interest rates (and returns) went down by 1%.

How much is Jackson's profit today? Enter your answer in the following format: 12.34 Hint: Compute the Bond PV before and after interest rate change, and take the difference. Answer is between 58.4 and 69.31

Question 8

Suppose the US government is issuing a $1,000 PAR value coupon bond today. This bond will mature in 20 years from today. The annual coupon rate of this bond is 7.5% and the coupons will be paid 4 times a year.

What will be the coupon payment each time it is paid? Enter your answer in the following format: 12.34 Hint: Answer is between 16.50 and 20.25

Question 9

One year ago, Carson Industries issued a 10-year, $1,000 PAR coupon bond at its PAR value. This Bond's annual coupon rate is 13%. Coupons are paid 2 times in a year. The Bond is currently trading at $900. However, this bond can be called in 6 years from today at a price of $1065

What is the capital gains yield on this Bond for the coming year? Enter your answer in the following format: + or - 0.1234 Hint: Answer is between 0.0057 and 0.0068