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1. A level coupon bond paying 8% interest semi-annually has a face value of $1,000 and 10 years left to maturity. If the present market rate of interest is 6%, what is the present value of the bond?

Round to nearest cents.

2. A corporation issues a bond today with a $825 face value, maturity in 25 years, and a 10% coupon interest rate; interest is paid annually. An investor purchases the bond for $853. What is the yield to maturity?

Answer in the format:

• Answer as a percentage but without the % sign
• Example: 0.0651 is entered as 6.51
• Do not round intermediary calculations. Use the full precision of your calculator or Excel.
• Round properly to two decimal places
  • Example: .157835 would be entered 15.78
  • Example: .055555 would be entered 5.56

3. Sasha Company has a level-coupon bond outstanding with a 9% coupon rate, payable annually. The bond has 20 years to maturity and a face value of $1,000; similar bonds currently yield 7%. By prior agreement the company will skip the coupon interest payments in years 8, 9 and 10. These payments will be repaid, without interest, at maturity. What is the bond's value?

Round to nearest cents.

4. A corporation issued a bond 7 years ago with a $1300 face value, maturity in 23 years, and a 7% coupon interest rate; interest is paid annually. An investor purchases the bond today for $1211. What is the yield to maturity?

Answer in the format:

• Answer as a percentage but without the % sign
• Example: 0.0651 is entered as 6.51
• Do not round intermediary calculations. Use the full precision of your calculator or Excel.
• Round properly to two decimal places
  • Example: .157835 would be entered 15.78
  • Example: .055555 would be entered 5.56

5. A corporation issues a bond today with a $945 face value, maturity in 5 years, and a 6% coupon interest rate; interest is paid annually. An investor purchases the bond for $945. What is the yield to maturity?

Answer in the format:

• Answer as a percentage but without the % sign
• Example: 0.0651 is entered as 6.51
• Do not round intermediary calculations. Use the full precision of your calculator or Excel.
• Round properly to two decimal places
  • Example: .157835 would be entered 15.78
  • Example: .055555 would be entered 5.56

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