Please write your answers in the blank space given. In order to get full credit, solutions must be clear and in detail. You need to show your calculator solutions i.e., PMT=, FV=, PV= etc.

1) A bond issued by Freedom, Inc. 10 years ago has a coupon rate of 8% and a face value of $1,000. The bond will mature in 15 years. What is the value to an investor with a required return of 11.5%?

Annual interest payment 80

15 N

11.5 I/Y

80 +/- PMT

1000 +/- FV

PV = -246.09

2) Atlantic Ocean Cruises sold an issue of 12-year $1,000 par bonds to build new ships. The bonds pay 4.15% interest, semiannually. Today's required rate of return is 8.9%. How much should these bonds sell for today? Round off to the nearest $1.

3) JCT Inc. just issued $1,000 par 30-year bonds. The bonds sold for $638.18 and pay interest semiannually. Investors require a rate of 10% on the bonds. What is the bonds' coupon rate?

4) SOSU, Inc. just issued $1,000 par 20-year bonds. The bonds sold for $1036 and pay interest semiannually. Investors require a rate of 6.59% on the bonds. What is the amount of the semiannual interest payment on the bonds?

5) KLM Inc. issued bonds on March 1, 2006. The bonds had a coupon rate of 5.9%, with interest paid semiannually. The face value of the bonds is $1,000 and the bonds mature on March 1, 2021. What is the intrinsic value of an KLM Inc. bond on March 1, 2012 to an investor with a required return of 9%?

6) Assume that New Territory Inc. has an issue of 20-year $1,000 par value bonds that pay 7% interest, annually. Further assume that today's required rate of return on these bonds is 6.5%. How much would these bonds sell for today? Round off to the nearest $1.

7) Gulf, Inc. has issued a $1,000 par 4% annual coupon bond that is to mature in 10 years. If your required rate of return is 6.5%, what price would you be willing to pay for the bond?

8) In 2000 J&M Inc. issued bonds with a 7 percent coupon rate and a $1,000 face value. The bonds mature on July 1, 2025. If an investor purchased one of these bonds on July 1, 2012, determine the yield to maturity if the investor paid $1,260 for the bond.

9) EFT, Inc. issued bonds on January 1, 2006. The bonds had a coupon rate of 4.5%, with interest paid semiannually. The face value of the bonds is $1,000 and the bonds mature on January 1, 2021. What is the yield to maturity for a EFT Corporation bond on January 1, 2012 if the market price of the bond on that date is $1190?

10) What is the expected rate of return on a bond that matures in 5 years, has a par value of $1,000, a coupon rate of 8.5%, and is currently selling for $988? Assume annual coupon payments.