# When providing answers: - Please provide four-digit decimal numbers if your answer is in percentage. ex) If

## Question:

When providing answers:

- Please provide four-digit decimal numbers if your answer is in percentage. ex) If your answer is 12.36%, please provide 0.1236

- If your answer is in dollars, please provide the number only. ex) If your answer is $1,234.56, please provide 1234.56
- excel formulas are very helpful

- One year ago Lerner and Luckmann Co. issued 15-year, noncallable, 10.5% annual coupon bonds at their par value of $1,000. Today, the market interest rate on these bonds is 10.5%. What is the current price of the bonds, given that they now have 14 years to maturity?

Noncallable bonds that mature in 10 years were recently issued by Sternglass Inc. They have a par value of $1,000 and an annual coupon of 5.0%. If the current market interest rate is 5.0%, at what price should the bonds sell?

Curtis Corporation's noncallable bonds currently sell for $1,265. They have a 10-year maturity, an annual coupon of $95, and a par value of $1,000. What is their yield to maturity?

Sommers Co.'s bonds currently sell for $1,050 and have a par value of $1,000. They pay an $80 annual coupon and have a 10-year maturity, but they can be called in 5 years at $1,125. What is their yield to maturity (YTM)?

Perry Inc.'s bonds currently sell for $1,050. They have a 6-year maturity, an annual coupon of $70, and a par value of $1,000. What is their current yield?

Meacham Enterprises' bonds currently sell for $1,180 and have a par value of $1,000. They pay a $105 annual coupon and have a 15-year maturity, but they can be called in 5 years at $1,050. What is their yield to call (YTC)?

Jerome Corporation's bonds have 15 years to maturity, an 8.25% coupon paid annually, and a $1,000 par value. The bond has a 6.50% nominal yield to maturity, but it can be called in 7 years at a price of $1,050. What is the bond's nominal yield to call?

Field Industries' outstanding bonds have a 25-year maturity and $1,000 par value. Their nominal yield to maturity is 8.25%, they pay interest annually, and they sell at a price of $950. What is the bond's nominal (annual) coupon interest rate?

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Field Industries' outstanding bonds have a 20-year maturity and $1,000 par value. Their nominal yield to maturity is 8.25%, they pay interest **semiannually**, and they sell at a price of $950. What is the bond's nominal (annual) coupon interest rate?

5-year Treasury bonds yield 5.0%. The inflation premium (IP) is 1.9%, and the maturity risk premium (MRP) on 5-year bonds is 0.4%. What is the real risk-free rate, r*?

The Gergen Group's 5-year bonds yield 6.85%, and 5-year T-bonds yield 4.75%. The real risk-free rate is r* = 2.50%, the default risk premium for Gergen's bonds is DRP = 0.85% versus zero for T-bonds, the liquidity premium on Gergen's bonds is LP = 1.25%, and the maturity risk premium for all bonds is found with the formula MRP = (t − 1) × 0.15%, where t = number of years to maturity. What is the inflation premium (IP) on 5-year bonds?

One year ago Lerner and Luckmann Co. issued 20-year, noncallable, 6.5% **semiannual **coupon bonds at their par value of $1,000. Today, the market interest rate on these bonds is 8.5%. What is the current price of the bonds, given that they now have 19 years to maturity?

Curtis Corporation's noncallable **semiannual **coupon bonds currently sell for $1,125. They have a 10-year maturity, a 9.5% coupon rate, and a par value of $1,000. What is their yield to maturity?

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