Assignment, Chapter 10: 1. A bond has a 7% coupon rate bond with semiannual payments.. The bond has 8 years before maturity and has a current price of $950, and callable in 3 years at a call price of 102 ($1,020). a) What is the bond's current yield? Note: both sides of paper. Summer: b) What is the bond's yield to maturity? c) What is the bond's yield to call? d) Assume you are able to reinvest the coupon payments at 8% (4% semi) annually over the next two years and, at the end of two years, sell the bond for the $980. What is your annual holding period return (or realized compound yield)? Example: CFA5 problem. 2. Consider two 0-coupon bonds ($1,000 par) with the following maturities (today's date is April 2019)? Maturity 1 year (Matures (April 2020) 2 years 3 years a) Draw the yield curve (complete curve assuming 30 year maturity is .034). Yield Yield (annual) .01 .018 .022 Plot points .034 .01 30 Maturity b) i) What is the price of a 1-year, 0-coupon bond today? 1 2 ii) What is the expected price of a 1-year, 0-coupon bond that will be issued one year from today (April 2020 and mature in April 2021)