1. A $1,000 face value bond with an 8.0000% coupon rate paying semiannual coupons has 10 years of maturity has a fair market value of $1,034.74.

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1. A 1,000 face value bond with an 8.0000
coupon rate paying semiannual coupons has 10
years of maturity has a fair market value of
1,034.74. a. What is this bonds yield to
maturity? 7.5000 b. If this bonds yield
to maturity changes to 9.0000, what would be
this bonds price? 934.96 2. The prices
of several 1,000 face value bonds are shown in
the table below. For each bond, state whether
the bond sells at par, at a discount or at a
premium. 3. Jackpot Jims Casino is
considering issuing 500 1,000 face value bond
with a 30-year maturity and a coupon rate of
7.0000 p.a. paying annual coupons. The casino
currently has a Standard Poors A rating.
However, due to recent financial difficulties at
the casino, Standard Poors is warning that it
may downgrade the rating to BBB. The yield on
A-rated, 30-year bonds is currently 6.5000 and
the yield on BBB-rated bonds is 6.9000. a. What
is the price of these bonds if the casino
maintains the A-rating? VB 1065.29 b. What
will the price of these bonds be if the casinos
bond rating is down graded to BBB? VB
1012.53 4. A 1000 face value bond with a
maturity of 6 years and a 7.8750 coupon rate
paying quarterly interest payments is currently
selling for 992.57 (minus fees and transaction
costs). The most recent dividend was paid
yesterday. What is the yield to maturity of this
bond? 8.0323

A B C D
972.50 1,040.75 1150.00 1,000.00
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5. At the beginning of the year a 1,000 face
value bond paying a coupon rate of 8.4800 APR
with quarterly payments and 11.5 years maturity
was selling at par (excluding fees and
transaction costs). Coupons are paid at the end
of each quarter. At the end of the year the
bond's YTM was 7.8500. What is the bonds total
yield for the year? 13.2311 6. You
are considering purchasing a 1,000 face value A
rated bond with 9.75 years to maturity and a
coupon rate of 8.650 with semiannual payments.
Todays Wall Steet Journal indicates that all A
rated bonds with a maturity of 9.75 years have a
YTM of 8.2500. The largest sales commission you
are willing to pay is 5. How much would you be
willing to pay for this bond today? (Show all
computations and/or calculator inputs work in at
least 4 decimal places) Hint Recall that ROR
(sales commission) is (Sales Price - Fair Market
Value) / Fair Market Value 1,077.76 7.
A 1,000 face value Diamond Jims Corporation
bond matures 1 Sep 2014. It has a 7.5750 coupon
rate and pays coupons semiannually. Its YTM as
of 1 Dec 2010 was 8.8250. What was this bonds
FMV as of 1 Dec 2010? 960.62