Please answer questions 7 to 11 with work, thank you! 7) Cohen has issued a bond

Question

Please answer questions 7 to 11 with work, thank you!


7) Cohen has issued a bond with the following characteristics: Par: $1,000; Time to maturity: 15 years; Coupon rate: 7%; Semiannual payment. What is the price of the bond if the YTM is 9%?

8) The Pane bond has 11.5 years to maturity, a YTM of 7.6%, and a current price of $1,060. The bond makes semiannual payments. What is the coupon rate on this bond?

9) What is the inflation rate if nominal return is 14% and real return is 10%?

10) Jay, Inc. and Nic Corp. both have 7% coupon bonds outstanding with semiannual payments and both are priced at par value. The Jay, Inc. bond has 2 years to maturity, while the Nic Corp. bond has 15 years to maturity. If interest rate suddenly rises from 7% to 9%, what is the percentage change in the price of these bonds? If interest rate suddenly decreases by 2%, what is the percentage change in the price of these bonds?

11. You purchase a bond with an invoice price of $950. The bond has a coupon rate of 6.8%, and there are 2 months to the next semiannual coupon date. What is the clean price of the bond?

Explanation / Answer

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Details Details Amount Semi Annual Interest Payment               35.00 Annuity Factor for 4.5% for 30 Years YTM/2 for 30 years               16.29 Present Value of Interest Payment             570.11 Present Value of Bond Principal 1000*.267             267.00 Total Present Value             837.11 Price of the Bond Present Value of Future Payment             837.11

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