1. Three years ago you purchased a 12% coupon bond that pays semiannual coupon payments for $989. What would be your bond equivalent yield if you sold the bond for current market price of $1,050? Your bond equivalent yield, if you sold the bond for current market price, is __%.
2. A $1,000 par value bond has a current price of $804.64 and a maturity value of $1,000 and matures in 7 years. If interest is paid semiannually and the bond is priced to yield 8%, what is the bond's annual coupon rate?
3. Two bonds have par values of $1,000. One is a 64%, 16-year bond priced to yield 10%. The other is a(n) 78%, 20-year bond priced to yield 5.5%. Which of these two has the lower price? (Assume annual compounding in both cases.)
4. You are considering the purchase of a $1,000 par value bond with a coupon rate of 4.5% (with interest paid semiannually) that matures in 12 years. If the bond is priced to yield 9%, what is the bond's current price?