Finance Mid-Term

Westco Company issued 14-year bonds a year ago at a coupon rate of 7.4 percent. The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 5.7 percent, what is the current bond price in dollars?

1,154.61

Treasury bills are currently paying 5 percent and the inflation rate is 3.2 percent.What is the exact real rate?

1.74

Treasury bills are currently paying 5 percent and the inflation rate is 3.2 percent.What is the approximate real rate of interest?

1.80

Locate the Treasury issue in Figure 7.5 maturing in August 2044. Assume a par value of $10,000. What is its bid price in dollars?

11,311.60

Locate the Treasury issue in Figure 7.5 maturing in August 2044. Assume a par value of $10,000. What was the previous day's asked price in dollars?

11,321.40

A Japanese company has a bond outstanding that sells for 94 percent of its ¥100,000 par value. The bond has a coupon rate of 5.3 percent paid annually and matures in 15 years. What is the yield to maturity of this bond?

5.88

Yan Yan Corporation has a $2,000 par value bond outstanding with a coupon rate of 5.4 percent paid semiannually and 24 years to maturity. The yield to maturity on this bond is 4.7 percent. What is the dollar price of the bond?

2,200.19

You want to have $3 million in real dollars in an account when you retire in 30 years. The nominal return on your investment is 13 percent and the inflation rate is 3.7 percent. What real amount must you deposit each year to achieve your goal?

22,131.55

Locate the Treasury issue in Figure 7.5 maturing in August 2044. Assume a par value of $10,000. What is its coupon rate?

3.125

Nikita Enterprises has bonds on the market making annual payments, with seven years to maturity, a par value of $1,000, and selling for $974. At this price, the bonds yield 7.2 percent. What must the coupon rate be on the bonds?

6.71

Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual coupon payments. Suppose a German company issues a bond with a par value of €1,000, 20 years to maturity, and a coupon rate of 7 percent paid annually. If the yield to maturity is 8.1 percent, what is the current price of the bond?

892.80

Suppose the real rate is 3.9 percent and the inflation rate is 5.5 percent. What rate would you expect to see on a Treasury bill?

9.61