Question: Question 1: Please determine the expected rate of return by using Trial and Error. You need two tables, PVIFA and PVIF, to look for the

Question 1:

Please determine the expected rate of return by using Trial and Error. You need two tables, PVIFA and PVIF, to look for the factor. Please provide a clear calculation and brief explanation.

Information as follow:

Company purchased bond with par value $1,000 that will mature in 10 Year and pay 5% interest annually. If the bond has market price for $1,175, what is the expected rate of return?

Question 2:

Please calculate the semi-annual Yield-to-maturity. Please provide a clear calculation and brief explanation.

Information as follows:

The bond with par value $1,000, and rate to maturity for 8%. Bond will sell for $890 with 5 years.

Question 3:

Please calculate the Value of Bonds. Please provide a clear calculation and brief explanation:

Bond has par value $1,000, 10% coupon rate, and pay semi-annually. Bond matures in 10 years.

Period Cash flow PVIF Discount Cash Flow

Question 4: (see page 93, Table 3-7)

The duration of a zero-coupon bond has par value $1,000, coupon rate 8%, and paid semi-annually and 6% yield.

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