Problem - 1

Buner Corp's outstanding bond has the following characteristics:

Years to Maturity 6.0

Coupon rate of interest 8.0%

Face value $1,000

If investors require a rate of return equal to 12 percent on similar risk bonds and interest is paid semiannually, what should be the market price of Buner's bond?

Problem -2

Intercontinental Baseball Manufacturers (IBM) has an outstanding bond that matures in 10 years. The bond, which pays $25 interest every six months ($50 per year), is currently selling for $598.55. What is the bond's yield to maturity?

Problem-3

Nancy Cotton bought NuTalk for $15 per share. One year later, Nancy sold the stock for $21 per share, just after she received a $0.90 cash dividend from the company. What total return did Nancy earn? What was the dividend yield and the capital gains yield?