1. The value of a bond is calculated using the present value of discounted cash flows. What is the discount rate?

1. The discount rate is the rate of return required for an investor to purchase the bond.
2. The discount rate is the difference between the face value and the purchase price expressed as a percentage.
3. The discount rate is the amount above the face value an investor is willing to pay for the bond.
4. The discount rate is the interest paid to the investor.

2. Smith Darby has issued a ten-year bond with a coupon rate of 8% and a face value of $5,000. As a personal investor, you require a rate of return of 10%. What is the value of the bond?

3. Find the future value of a quarterly annuity of $8,000 at 10% for 6 years compounded quarterly.

4. Find the future value of an ordinary annuity of $400 paid monthly for 25 years. The interest rate is 8.4%.

Compute the following:

5. What is the cash flow of a 10-year bond that pays coupon interest annually, has a coupon rate of 15%, and has a par value of $80,000?

6. The $4,000 face value ABC bond has a coupon rate of 8%, with interest paid semi-annually, and matures in 10 years. If the bond is priced to yield 12%, what is the bond's value today?

7. The $3,000 face value EFG bond has a coupon of 15% (paid semi-annually), matures in 8 years, and has current price of $2,500. What is the EFG bond's yield to maturity?

8. The KLM bond has a 10% coupon rate,with interest paid quarterly, a maturity value of $4,000, and matures in 10 years. If the bond is priced to yield 6%, what is the bond's current price?

9. The NOP bond has an 6.24% coupon rate (semi-annual interest), a maturity value of $5,000, matures in 10 years, and a current price of $5,200. What is the NOP's yield-to-maturity?

10. A pension fund manager invests $10 million in a debt obligation that promises to pay 8% per year for eight years. What is the future value of the $10 million?