Finance Week Six 21 Problems Assignment

| September 29, 2018

1.
Tealers Wheel Software has 8.53% coupon bonds on
the market with nine years to maturity. The bonds make semi-annual payments and
currently sell for 114.24% of par. What is the current yield?
Note: Enter your answer rounded off
to two decimal points.
2.
ABC’s Inc.’s bonds currently sell for
$1,280 and have a par value of $1,000.
They pay a $135 annual coupon and have a 15-year maturity, but they can
be called in 5 years at $1,050. What is
their yield to call (YTC)?
Note: Enter your answer rounded off
to two decimal points. Do not enter $ or comma in the answer box. For
example, if your answer is $12.345 then enter as 12.35 in the answer box.
3.
ABC has issued a bond with the following
characteristics:
Par: $1,000; Time to
maturity: 12 years; Coupon rate: 11%;
Assume semi-annual coupon payments.
Calculate the price of this bond if the YTM is 9.7%
Note: Enter your answer rounded off
to two decimal points. Do not enter $ or comma in the answer box.
4.
ABC wants to issue 13-year, zero coupon
bonds that yield 11.43 percent. What price should they charge for these
bonds if they have a par value of $1,000? That is, solve for PV. Assume annual
compounding.
Hint: zero coupon bonds means PMT =
0
Note: Enter your answer rounded off
to two decimal points. Do not enter $ or comma in the answer box.
5.
A bond which sells for less than the face value
is called a:

perpetuity.

par value bond.

premium bond.

debenture.

discount bond.

6.
ABC has issued a bond with the following
characteristics:
Par: $1,000; Time to
maturity: 12 years; Coupon rate: 9%;
Assume semi-annual coupon payments.
Calculate the price of this bond if the YTM is 7.11%
Note: Enter your answer rounded off
to two decimal points. Do not enter $ or comma in the answer box.
7.
ABC Inc., has $1,000 face value bonds
outstanding. These bonds mature in 3 years, and have a 6.5 percent coupon. The
current price is quoted at 98.59 percent of par value. Assume semi-annual
payments. What is the yield to maturity?
Note: Enter your answer rounded off
to two decimal points.
8.
ABC Corp. issued 15-year bonds 2 years ago at a
coupon rate of 10.6%. The bonds make semi-annual payments. If these bonds
currently sell for 97% of par value, what is the YTM?
Note: Enter your answer rounded off
to two decimal points.
9.
ABC’s bonds have a 9.5 percent coupon and
pay interest semi-annually. Currently, the bonds are quoted at 106.315 percent
of par value. The bonds mature in 8 years. What is the yield to maturity?
10.
The 7.37 percent, $1,000 face value bonds
of Tim McKnight, Inc., are currently selling at $1,044.9. What is the current
yield?
Note: Enter your answer rounded off
to two decimal points.
11.
A premium bond is a bond that:

has a face value in excess of $1,000.

has a par value which exceeds the face value.

is callable within 12 months or less.

has a market price which exceeds the face value.

is selling for less than par value.

12.
The 10.57 percent coupon bonds of the
Peterson Co. are selling for $884.85. The bonds mature in 5 years and pay
interest semi-annually. These bonds have current yield of _____ percent.
Enter your answer in percentages
rounded off to two decimal points.
13.
The 8 percent coupon bonds of the Peterson Co.
are selling for 98 percent of par value. The bonds mature in 5 years and pay
interest semi-annually. These bonds have a yield to maturity of _____ percent.

14.
Assume that you wish to purchase a 12-year bond
that has a maturity value of $1,000 and a coupon interest rate of 11%, paid
semiannually. If you require a 7.6% rate of return on this investment (YTM),
what is the maximum price that you should be willing to pay for this bond? That
is, solve for PV.
Note: Enter your answer rounded off
to two decimal points.
15.
You paid $919 for a corporate bond that has a
11.57% coupon rate. What is the current yield?
Hint: if nothing is mentioned, then
assume par value = $1,000
Note: Enter your answer rounded off
to two decimal points.
16.
ABC has issued a bond with the following
characteristics:
Par: $1,000; Time to maturity: 9
years; Coupon rate: 5%;
Assume annual coupon payments.
Calculate the price of this bond if the YTM is 10.74%
Note: Enter your answer rounded off
to two decimal points.
17.
You have observed the following returns on ABC’s
stocks over the last five years:
4.3%, 9.7%, -8.3%, 10.4%, -2.5%
What is the geometric average
returns on the stock over this five-year period.
Note: Enter your answer in
percentages rounded off to two decimal points.
18.
You have observed the following returns on ABC’s
stocks over the last five years:
4.1%, 8.3%, 5.8%, 11%, 3.6%
What is the geometric average
returns on the stock over this five-year period.
Note: Enter your answer in
percentages rounded off to two decimal points.
19.
You have observed the following returns on ABC’s
stocks over the last five years:
4.2%, 8.9%, -11.7%, 13.3%, -9%
What is the arithmetic average
returns on the stock over this five-year period.
Note: Enter your answer in
percentages rounded off to two decimal points
20.
You have observed the following returns on ABC’s
stocks over the last five years:
3.7%, 9.8%, 13.2%, 11.4%, 7.7%
What is the arithmetic average
returns on the stock over this five-year period.
Note: Enter your answer in
percentages rounded off to two decimal points.
21.
Suppose the returns for Stock A for last
six years was 4%, 7%, 8%, -2%, 9%, and 7%.
Compute the standard deviation of the returns.

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