WEEK FOUR

1. (Bond valuation) Hamilton, Inc. bonds have a coupon rate of 11 percent. The interest is paid semiannually, and the bonds mature in 8 years. Their par value is $1,000. If your required rate of return is 15 percent, what is the value of the bond? What is the value if the interest is paid annually?

If the interest is paid semiannually, the value of the bond is $(Round to the nearest cent.) ANWSER:

2. (Bond valuationzero coupon) The Latham Corporation is planning on issuing bonds that pay no interest but can be converted into $1,000 at maturity, 6 years from their purchase. To price these bonds competitively with other bonds of equal risk, it is determined that they should yield 7 percent, compounded annually. At what price should the Latham Corporation sell these bonds? The price of the Latham Corporation bonds should be $(Round to the nearest cent.) ANSWER:

PLEASE ANSWER EACH (BOTH) QUESTION CORRECTLY AND FULLY!