# Maryland FINC 440 Quiz 3 Chapters 14, 17, and 18

Use the following information to answer the next five problemsCompanyTickerCouponMaturityLast PriceLast YieldEST SpreadUSTEst $ Vol (000’s)Gen ElecGE7.7510/19/201592.509.7976003099,5901.What annual dollar coupon amount will investors receive?2. What price would you pay in dollars to purchase this bond?3. What is the estimated yield on Treasury securities?4. What is the current yield for this bond?5. What is the yield to maturity on this bond?Use the following information ABOUTGOVERNMENT NOTE to answer the next TWO problemsRateMaturityBidAskedCHGASKYLD2.875Nov13n99:0299:03-23.556. What annual dollar coupon amount will investors receive if face value of the Treasure note is $1,000?7. What price would you pay in dollars to purchase this Treasure note?Use the following information ABOUT T-bill to answer the next problemMaturity DAYS TO MAT Bid Asked CHG ASKYLDAug17 XXXX 41 2.68 2.67 0.01 2.728. What price would you pay in dollars to purchase this Treasure bill?Use the following information ABOUT TIPS to answer the next problemPar value $1,000Issued on July 15, 2008Maturity on July 15, 2012Coupon 2.5%9. Fill in the table. Calculate rate of inflation, accrued principal and semiannual interest payment.10. The Peterson Company has FCFF of $1000. FCFF is expected to grow by 12% next year. The cost of capital is 12% and the level of debt is $5000. The number of shares outstanding is 500. Calculate the firm’s share price.11. The Pekay Company has FCFE of $800. FCFE is expected to grow by 7% next year. The cost of capital is 7% and the level of debt is $4000. The number of shares outstanding is 700. Calculate the firm’s share price. 12. Suppose you have a 15%, 25 year bond traded at $975. If it is callable in 5 years at $1050, what is the bond’s yield to call? Interest is paid annually. (You should use Excel or financial calculator).13. Consider a zero coupon bond that has a current price of $436.19 and matures in 10 years. What is its yield to maturity?USE THE FOLLOWING INFORMATION FOR THE NEXT THREE PROBLEMS. Assume that you purchase a 10-year $1,000 par value bond, with a 12% coupon, and a yield of 9%. Immediately after you purchase the bond, yields fall to 8% and remain at that level to maturity. You hold the bond for 5 years and then sell. Interest is paid annually.14. Calculate the purchased price of the bond today.15. Compute the future price of the bond (Pf ) at the end of year 5 (Coupon interest payments are paid annually).16. Calculate the realized horizon yield.USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS. Assume that you purchased a 6 percent coupon, $1,000 par bond maturing in six years if the yield to maturity is 5 percent and interest is paid annually.17. Calculate the duration of the bond.18. Calculate the modified duration of the bond. USE THE FOLLOWING INFORMATION FOR THE NEXT TWO PROBLEMS. Consider a bond with duration of 6 years having a yield to maturity of 8% and interest rates are expected to rise by 50 basis points. 19. What is the percentage change in the price of the bond?20. If the price before yields changed was $950, what is the resulting price?