Questions 11 to 15 are problems to be solved. Please include your work if you would like partial credit if the ultimate answer is incorrect. That is, if you just write a one-number answer, its either right or wrong.

11. Nate purchases a STRIP that will mature in 15 years. The price quote per hundred of par for the strip is 48.125%. Using semiannual compounding what is the promised yield to maturity on the STRIP?

12. A T-Bond with a $10,000 par value and 8.25 years to maturity is quoted at 94.28 Bid, 94:34 Ask. The clean price for you to buy this bond is

13. What is the quoted ask yield on a 14-year $100,000 par T-Bond with a 5.25% semiannual coupon and a price quote of 96.75?

14. The ask yield on a 6.75% coupon Treasury bond maturing in 8 years is 5.42%. If the face value is $1,000, what should be the QUOTED cost of the bond today? (use semiannual compounding)? 1

5. The convertible bonds of RKO, Inc. may be converted into 28.25 shares of common stock. The bonds have a par value of $1,000, a coupon rate of 4.80 percent, pay interest semi-annually, and have 8 years left until they mature. The yield to maturity is 4.25 percent. If the common stock of RKO is currently selling for $37.50 per share, what should be the market price of the convertible bonds?