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Southwest Tennessee Community CollegeHISTORY 2010 1) Bond Prices[LO2] Sqeekers Co

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Southwest Tennessee Community CollegeHISTORY 2010

1) Bond Prices[LO2] Sqeekers Co. issued 15-year bonds a year ago at a coupon rate of 4.1 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 4.5 percent, what is the current bond price?

2. Bond Yields[LO2] Heginbotham Corp. issued 20-year bonds two years ago at a coupon rate of 5.3 percent. The bonds make semiannual payments. If these bonds currently sell for 105 percent of par value, what is the YTM?

3. Coupon Rates[LO2] DMA Corporation has bonds on the market with 14.5 years to maturity, a YTM of 5.3 percent, a par value of $1,000, and a current price of $965. The bonds make semiannual payments. What must the coupon rate be on these bonds?

4. Zero Coupon Bonds[LO2] You find a zero coupon bond with a par value of $10,000 and 17 years to maturity. If the yield to maturity on this bond is 4.9 percent, what is the price of the bond? Assume semiannual compounding periods.

5. Inflation and Nominal Returns[LO4]Suppose the real rate is 1.9 percent and the inflation rate is 3.1 percent. What rate would you expect to see on a Treasury bill?