BONDS AND BOND VALUATION CHAPTER 5 EXERCISES Chapter 5 Exercises 01. Two 10,000 par value bonds...

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BONDS AND BOND VALUATION CHAPTER 5 EXERCISES Chapter 5 Exercises 01. Two 10,000 par value bonds with 4% coupon rate payable semiannually are currently selling at par. Bond A matures in 7 years at par, while Bond B matures in 15 years at par. If the current market rates of interest suddenly go to 6% convertible semiannually, find the percentage change in the price of Bond A? Bond B? 02. A 1,000 bond matures at par in n years. It has a coupon rate of 5% convertible semiannually. It is bought to yield 4% convertible semiannually. If the term of the bond is doubled, the price will increase by 50. Find the price of the n year bond. 03. A 1,000 bond with annual coupon is redeemable at par at the end of 10 years at a purchase price of 920 the yield rate is exactly 1% more than the coupon rates. Find the yield rate on the bond. 04. What is the current market price of a zero coupon bond that matures exactly 5 years and has a face value of 1,000. The annual percentage rate is 5.5%? 05. What is the annual percentage rate of a zero coupon bond that pays 1,000 in exactly 7 years and is currently selling for 591.11. BONDS AND BOND VALUATION CHAPTER 5 EXERCISES Chapter 5 Exercises 01. Two 10,000 par value bonds with 4% coupon rate payable semiannually are currently selling at par. Bond A matures in 7 years at par, while Bond B matures in 15 years at par. If the current market rates of interest suddenly go to 6% convertible semiannually, find the percentage change in the price of Bond A? Bond B? 02. A 1,000 bond matures at par in n years. It has a coupon rate of 5% convertible semiannually. It is bought to yield 4% convertible semiannually. If the term of the bond is doubled, the price will increase by 50. Find the price of the n year bond. 03. A 1,000 bond with annual coupon is redeemable at par at the end of 10 years at a purchase price of 920 the yield rate is exactly 1% more than the coupon rates. Find the yield rate on the bond. 04. What is the current market price of a zero coupon bond that matures exactly 5 years and has a face value of 1,000. The annual percentage rate is 5.5%? 05. What is the annual percentage rate of a zero coupon bond that pays 1,000 in exactly 7 years and is currently selling for 591.11.

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01 To find the percentage change in the price of Bond A and Bond B we need to compare the prices before and after the change in market interest rates For Bond A Par value 10000 Coupon rate 4 semiannua... View the full answer