1.Calculate the following, but before calculating the answer for each, test yourself by determining (where applicable) if each bond is trading at a premium, discount, or at par.SHOW THE CALCULATION IN BA II PLUS CALCULATOR

a.What is the present value of $1,040 to be received in 1 year's time, with a 4% discount rate?

b.What is the present value of a 1 year bond with a $1,000 par value, a 4% annual coupon, with a 6 % discount rate?

c.What is the present value of a 1 year bond with a $1,000 par value with a 4 % annual coupon, with a 2% discount rate?

2. Calculate the present value of the following bond. Only calculate one step at a time. SHOW THE CALCULATION IN BA II PLUS CALCULATOR - [An 8%, 6-year semi-annual bond with a $10,000 par value and a 6% discount rate]

a.Step 1: Present value of the Income Stream (coupons)

b.Step 2: Present value of the Principal

c.Step 3: Present value of the whole Bond

3. Treasury bill yield calculations. SHOW THE CALCULATION IN BA II PLUS CALCULATOR

a.What is the yield on a 181 day, T-bill purchased at $98,000?

b.What is the yield on a 90 day T-bill purchased for $99?

4. Company XYZ issues a bond with a 10% coupon, a $1,000 par value, and 10 years to maturity. For each of the following, calculate the Yield to Maturity and the Current Yield. SHOW THE CALCULATION IN BA II PLUS CALCULATOR

a.If an investor purchased the bond for $1,000 (100)

b.If an investor purchased the bond at 90

c.If an investor purchased the bond at 110