Question: Part 2. Calculation Practice Instructions : Answer all questions below. Make sure to show your work. A bond has a coupon rate of 4% and

Part 2. Calculation Practice

Instructions: Answer all questions below. Make sure to show your work.

  1. A bond has a coupon rate of 4% and pays coupons semi-annually. The bond matures in 10 years and has a yield of 4.5%. What is the value of the bond?

  1. What is the value of a 12-year bond with a coupon rate of 5% and a yield of 5.5%? Payments are semi-annual.

  1. A bond sells for $1000 and matures in 6 years. The bond makes semi-annual payments and has a yield of 3%. What is the coupon rate? What is the coupon?

  1. A bond sells for $1015 and matures in 6 years. The bond makes semi-annual payments and has a yield of 3%. What is the coupon? What is the coupon rate?

  1. A zero-coupon bond has a yield of 4% and a time to maturity of 6 years. What is its value?

6. Your tax rate is 25% and you own a taxable bond earned a yield of 6%. What is your yield after taxes?

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