I. PROBLEMS. A. We buy a 20 year maturity bond, which we intend to sell in 3 years when required rates are 12%. The market rates now are 14%, and the interest the bond issuer pays per annum is $80. Compute the market price of the bond. B. There is a 5%, 13 year bond that has a price of $1200. If it is callable at 104 par in 3 years compute the YTM and the coupon rate. C. A preferred stock is paying S6 per annum and is callable after 7 years. The yields for similar instruments are 8%. Derive the price of the preferred stock. What is its price , if it is not callable? D. If we want to purchase a 30 year. 9% bond now, when interest rates are 10%, how much should we pay, if we know the following. We intend to sell it in 7 years at which time we estimate the required rates to be 2% annually. E. Compute the price of a 4% bond which has 11 years of life left and which has a YTM of 5%