Problem 13-7 Current Yield

Consider a bond with a 9 percent semiannual coupon rate and a maturity of 4 years. Suppose that the face value of the bond is $1,000 and is selling for 945.

Annual Interest	$90.00
PB	$945

What would the current yield be on this bond?

The current yield on this bond would be % . Round your answer to the nearest two decimal places.

Problem 13-13 Portfolio Future Value

Consider a portfolio manager who needs $1,200 at the end of 4 years and purchases (at par) an annual coupon bond with a rate of 4% that matures in 4 years.

YTM	6.00%
Face Value	$1,000.00
Annual Coupon	$100.00
n	4

If the face value of the bond is $1,000 and the yield immediately changes to 6%, how much will the investor have at the end of 4 years if the investor can reinvest the coupons at 6%?

At the end of 4 years, the investor will have $ . Round your answer to the nearest two decimal places.

Problem 13-18 Straight Ladder

Suppose you use a $315,000 bond portfolio to construct a straight ladder over the next 15 years.

Portfolio	$315,000.00
n	15

How much would you invest in bonds maturing in each year of the ladder?

You would invest $ in each year of the ladder. Round your answer to the nearest two decimal places.

Problem 13-19 Barbell

Suppose you use a $286,000 bond portfolio to construct a barbell strategy over the next 20 years.

Portfolio	$286,000.00

How much would you invest in bonds maturing in year 20?

You would invest $ in bonds maturing in year 20. Round your answer to the nearest two decimal places.