Calculation Questions 4. Calculate the price of these bonds. SHOW YOUR WORK. (4 marks) a) 4-year...

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Calculation Questions 4. Calculate the price of these bonds. SHOW YOUR WORK. (4 marks) a) 4-year Quebec 6.00% semi-annual, $100 par value. Investors require a yield to maturity of 7% compounded semi-annually. Mode= N= P/Y= C/Y= I/Y= PMT= FV= PV = b) 4-year Government of Alberta strip bond, $100 par value. Investors require a yield to maturity of 7% compounded annually. Mode= N= P/Y= C/Y= I/Y= PMT= FV= PV = 5. Calculate the yield to maturity for the following bonds. SHOW YOUR WORK. (4 marks) a) 4-year Canada 5.50% semi-annual, priced at 97.74 Mode= N= P/Y= C/Y= PMT= FV= PV = I/Y= (round to 2 decimals eg. 4.35%) b) 15-year Canadian Tire 12.10% annual, priced at 119.16 Mode= N= P/Y= C/Y= PMT= FV= PV = I/Y= (round to 2 decimals eg. 4.35%) 6. Calculate the annualized yield on a 182 day T-bill purchased at 97.8 (round to 2 decimals eg. 4.35%) SHOW YOUR WORK. (2 marks) Complete the sentences by deleting the inappropriate terms. (5 marks) 7. If interest rates are expected to fall, investors should buy [High / Low] coupon, [Long / Short] term bonds because they are more volatile and therefore have a greater % of [Income / Capital Gain / Capital Loss]. 8. The difference between the cost of commercial paper and its maturity value is taxed as [Income / Capital Gain/Capital Loss]. 9. Bond prices are less sensitive to a 1% change in yield when yields are initially [High/Low]. Calculation Questions 4. Calculate the price of these bonds. SHOW YOUR WORK. (4 marks) a) 4-year Quebec 6.00% semi-annual, $100 par value. Investors require a yield to maturity of 7% compounded semi-annually. Mode= N= P/Y= C/Y= I/Y= PMT= FV= PV = b) 4-year Government of Alberta strip bond, $100 par value. Investors require a yield to maturity of 7% compounded annually. Mode= N= P/Y= C/Y= I/Y= PMT= FV= PV = 5. Calculate the yield to maturity for the following bonds. SHOW YOUR WORK. (4 marks) a) 4-year Canada 5.50% semi-annual, priced at 97.74 Mode= N= P/Y= C/Y= PMT= FV= PV = I/Y= (round to 2 decimals eg. 4.35%) b) 15-year Canadian Tire 12.10% annual, priced at 119.16 Mode= N= P/Y= C/Y= PMT= FV= PV = I/Y= (round to 2 decimals eg. 4.35%) 6. Calculate the annualized yield on a 182 day T-bill purchased at 97.8 (round to 2 decimals eg. 4.35%) SHOW YOUR WORK. (2 marks) Complete the sentences by deleting the inappropriate terms. (5 marks) 7. If interest rates are expected to fall, investors should buy [High / Low] coupon, [Long / Short] term bonds because they are more volatile and therefore have a greater % of [Income / Capital Gain / Capital Loss]. 8. The difference between the cost of commercial paper and its maturity value is taxed as [Income / Capital Gain/Capital Loss]. 9. Bond prices are less sensitive to a 1% change in yield when yields are initially [High/Low].