Sioux Financial Corp. forecast the value of its bond portfolio for the coming year at $105 million. In one year, he expects to receive $10,000,000 in coupon payments. The bond portfolio today is worth $101 million. What is the expected return on this portfolio of bonds?

11. Hurricane Corp. recently purchased corporate bonds on the secondary market with a par value of $11 million, a coupon rate of 12 percent (with annual coupon payments), and four years to maturity. If Bullock intends to sell the bonds in two years and expects the required rate of return for investors at that time on similar investments to be 14 percent at that time, what is the expected market value of the bonds at that time? two years?

12. Assume a bond with a par value of $1,000 and a coupon rate of 11 percent, two years remaining to maturity, and a yield of 10 percent to maturity. The duration of this bond is

13. Assume a bond with a par value of $1,000 and a coupon rate of 11 percent, two years remaining to maturity, and a yield of 10 percent to maturity. The modified duration of this bond is

14. Stephanie would like to buy a bond that has a par value of $1,000, pays $80 at the end of each year in coupon payments, and has ten years to maturity. If the prevailing annualized yield on other bonds with similar characteristics is 6 percent, how much will Stephanie pay for the bond?

15. Julia has just purchased a $1,000 par value bond with an annual coupon rate of 10 percent and a life of twenty years. The bond has four years to maturity, and the yield to maturity is 12 percent. How much did Julia pay for the bond?

16. A $1,000 par value bond, paying $50 semi-annually, with an 8 percent yield to maturity and five years remaining to maturity, must be sold for

17. Due to a change in the required rate of return from 11 percent to 13 percent, the price of the zero coupon bond will drop from $1,000 to $860. Therefore, the bond price elasticity for this bond is

18. The required rate of return on a certain bond changes from 12 percent to 8 percent, causing the price of the bond to change from $900 to $1,100. The bond price elasticity of this bond is

19. Assume a bond with a par value of $1,000 and a coupon rate of 11 percent, two years remaining to maturity, and a yield of 10 percent to maturity. The duration of this bond is ____ years.

20. A bond has a par value of $1,000 and a coupon rate of 8 percent. The bond has four years to maturity and a 10 percent yield to maturity. The modified duration of this bond is ____ years.