Question: please solve using formulas. no excel 4. This question is not cumulative (a) Small Industries bonds sell for $896.09. The bond life is 7 years,
4. This question is not cumulative (a) Small Industries bonds sell for $896.09. The bond life is 7 years, and the yield to maturity is 8.5 percent. What must be the coupon rate on the bonds? Coupons are paid semi-annually. (b) Hacker Software has 6.2 percent coupon bonds on the market with nine years to maturity. The bonds make semiannual payments and currently sell for 105 percent of par. What is the yield to maturity on this bond? (Write down the expression for YTM and then use a financial calculator or a spreadsheet program to find the answer) (c) How much would an investor lose if she purchased a 25-year zero-coupon bond with a $1,000 par value and 9 percent yield to maturity, only to see market interest rates increase to 11 percent one year later? (Hint: what is the price of the zero-coupon bond one year later?)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
