Question: Question 1 : A bond ( with a face value of $ 1 , 0 0 0 ) was sold with a 1 2 %

Question 1: A bond (with a face value of $1,000) was sold with a 12% coupon rate with a maturity of exactly 25 years. If the yield to maturity is 9%(compounded semi-annually), what is the price of the bond today? What is the bonds current yield?
Question 2: Assume a fixed income security (e.g. a bond), which has a face value of $1,000, has a 9% annual coupon rate (it pays coupons semi annually), and a remaining maturity of 20 years. If the security is trading at a price of $582.64, what is the bonds yield to maturity? What is the bonds current yield? What is the bonds capital gain (or loss) yield?
Question 3: Answer the following questions given the information below about your employment history and your future cash needs (assuming a 10% discount rate throughout):
Today is your 25th birthday, and starting exactly 1 year after you were born, your grandmother deposited $1,000 into an account on your birthday (including today, your 25th birthday) this is the last of those deposits. On your 22nd birthday, you added $5,000 to the account and have added 8% more on each birthday (including your 25th birthday, this year) this is the last of those deposits. In addition, you are going to begin depositing $50,000(beginning today your 25th birthday) into this account. You will deposit this constant amount each year (beginning today) for the next 28 years (that is, today plus 28 more deposits). Exactly 3 years after the last deposit, you want to withdraw a constant amount per year for a total of 30 years (that is, there will be 30 total withdrawals).
If you want a zero balance in your account immediately after the last withdrawal what is the amount of each of the constant amounts being withdrawn?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!