whats the solution to problem 19?

will be only 9 next year? ar was 3.4 percent, what last year of 11.65 percent. If the inflation rate last year w your real return? I5. Nominal versus Real Returns LO4] Say you owl Figure 7.4 me at Using Treasury Quotes [LO2] Locate the Treasury issue in February 2038. day's asked uri 16. What is its coupon rate? What is its bid price? What was the price? Assume a par value of $10,000 yiel? u 17. Using Treasury Quotes /LO2] Locate the Treasury bond in Figure 7.4 mar August is its yield to maturity? What is the bid-ask spread in dollars? Assume a par valie premium or a discount bond? What is its current ue of DIATE 18. Bond Price Movements [LO2] Bond X is a premium bond makin 18-31) payments. The bond pays a coupon rate of 8.5 percent, has a YTM of 7 percen $10,000. semiannual semianand also has has 13 years to maturity. Bond Y is a discount bond making semiannual p This bond pays a coupon rate of 7 percent, has a YTM of 8.5 percent, and 13 years to maturity. What is the price of each bond today? If interest rates remaia unchanged, what do you expect the price of these bonds to be one year from now?l three years? In eight years? In 12 years? In 13 years? What's going on here? Illustrate your answers by graphing bond prices versus time to maturity als 19. Interest Rate Risk [LO2] Both Bond Sam and Bond Dave have 6.5 perce coupons, make semiannual payments, and are priced at par value. Bond Sam has 3 years to maturity, whereas Bond Dave has 20 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of Bond Sam? Of Bond Dave? If rates were to suddenly fall by 2 percent instead, what would the percentage change in the price of Bond Sam be then? Of Bond Dave? Illustrate your answers by graphing bond prices versus YTM. What does this problem tell you about the interest rate risk of longer-term bonds? 20. Interest Rate Risk [LO2] ] Bond J has a coupon rate of 3 percent. Bond K has a coupon rate of 9 percent. Both bonds have 19 years to maturity, make semiannual payments, and have a YTM of 6 percent. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds? What if rates suddenly fall by 2 percent instead? What does this problem tell you about the interest rate risk of lower-coupon bonds? 21. Bond Yields [LO2] Bourdon Software has 6.4 percent coupon b with 18 years to maturity. The bonds make semiannual payments and currently for 106.8 percent of par. What is the current yield on the bonds? The YTM? The onds on the market effective annual yield