Do all calculations using 9 decimal places retain the 9 decimal places throughout the calculations, then when you report answers round to 2 decimal places? Examples: If the answer is in years: i.e., 9.5576 report 9.56 years. If the answer is in dollars, i.e., $56.987.555 report to the nearest cent $56,987.56. If the answer is in percentage terms i.e., 10.4478% report 10.45% If the answer is in times i.e., 4.783 report 4.78 times. You need to be very precise with rounding and reporting. For instance, if the answer is 9 times you must report 9.00, the homework grading program will count 9 as incorrect, it would count 9.0 as incorrect, everything must be carried or rounded to two decimal places. Another example if the answer is $48,000, you must report 48,000.00.

Problem 1: Bond Prices. SOS, Inc. has 7% coupon bonds on the market that have 5 years left to maturity. The bonds make annual payments. If the YTM on these bonds is 13%, what is the current bond price? The current bond price is $__________.

Problem 2: Bond Yields. Leeland Co. has 9% coupon bonds on the market with 8 years left to maturity. The bonds make annual payments. If the bond currently sells for $946.65, what is its YTM? Its YTM is ________%.

Problem 3: Coupon Rates. Gramme Enterprises has bonds on the market making annual payments, with 12 years to maturity, and selling for $1600. At this price, the bonds yield 5.4%. What must the coupon rate be on Gramme's bonds? The coupon rate is ______%.

Problem 4: Bond Yields. Emmar Corp. issued 14-year bonds 2 years ago at a coupon rate of 9.6%. The bonds make semiannual payments. If these bonds currently sell for 99% of par value. What is the YTM? The YTM is _____%.

Problem 5 Calculating Real Rates of Return. . If Treasury bills are currently paying 2.05% and the inflation rate is 0.5%, what is the exact real rate of interest? The exact real rate of interest is______%.

Problem 6: Nominal and Real Returns. An investment offers a 14 % total return over the coming year. Crystal Prediction thinks the total real return on this investment will be only 11%. Given this one can infer that Crystal believes the inflation rate will be _____ % over the next year.

Problem 7: Stock Values

Courageous, Inc. just paid a dividend of $3.00 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year, indefinitely. If investors require a 12 percent return on Courageous stock, what is the current price? What will the price be in three years? In 15 years?

1. Current Price $_____________

2. Price in 3 Years $____________

3. Price in 15 Years $___________

Problem 8: Stock Values

The next dividend payment by ASAP, Inc., will be $0.98 per share. The dividends are anticipated to maintain a 3 percent growth rate, forever. If ASAP stock currently sells for $4.75 per share, what is the required return?

__________________%

Problem 9: Stock Values

Stock Values

For the company in the previous problem, what is the dividend yield? What is the expected capital gains yield?

1. Dividend yield _____________%

2. Capital Gains Yield _____________%

Problem 10: Stock Values

Emmar Corporation will pay a $10.00 per share dividend next year. The company pledges to increase its dividend by 11 percent per year, indefinitely. If you require a 12 percent return on your investment, how much will you pay for the companys stock today?

$ ____________________