# 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?
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)?
to two decimal points. Do not enter \$ or comma in the answer box. For
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%
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
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.

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%
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?
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?
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?
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.
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.
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
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%
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.
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.
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.
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.