Suppose that you are considering the purchase of a bond that matures in 12 years. The bond has a par value of $1,000 it pays a coupon of 10 percent (annually), and the coupon is paid semiannually (10s).

QUESTION 1

1. Calculate the market value (price) of the bond today if the bond's market rate (yield) is 7%.

   $1,833

   $1,241

   $802

   $841

   None of the above

   QUESTION 2

   1. Calculate the market value (price) of the bond in five years if the bonds market rate is 4%.

      		$800
      		$1,269
      		$1,363
      		$449
      		None of the above QUESTION 3 Calculate the Net Present Value and the yield on this bond investment if the current market rate on this bond is 7%, you expect the market rate to be 4% in 5 years, you plan to sell the bond in five years, and your required rate of return on this investment is 8% (4% semiannually). Is this an acceptable investment? (hint: use the purchase price in part A, and the sell pri ce in part B). What is the NPV? QUESTION 4 Calculate the Net Present Value and the yield on this bond investment if the current market rate on this bond is 7%, you expect the market rate to be 4% in 5 years, you plan to sell the bond in five years, and your required rate of return on this investment is 8% (4% semiannually). Is this an acceptable investment? (hint: use the purchase price in part A, and the sell price in part B) What is the annual Yield? QUESTION 5 Calculate the Net Present Value and the yield on this bond investment if the current market rate on this bond is 7%, you expect the market rate to be 4% in 5 years, you plan to sell the bond in five years, and your required rate of return on this investment is 8% (4% semiannually). Is this an acceptable investment? (hint: use the purchase price in part A, and the sell price in part B) Is this an acceptable investment?