UGBA 103 Assignment 2

Jul 20th, 2016
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Berkeley College
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All bonds have a par of $1,000 unless otherwise stated. 1. Find the price of a 14-year bond that has a coupon of 7.50% and par of $1,000. The 
market interest rate is 7.21%. 
 2. Find the price of a 14-year, $1,000 par, zero-coupon bond, given that the market interest rate is 7.21%. 
 3. Find the new price of the bond in (2) if the market interest rate increases to 7.70%. 
 4. Find the price of a 4-year bond that has a coupon of 8.44% (paid quarterly) and par of $1,000. The market interest rate is 7.80%. 
 5. Find the price of a 6-year bond that has a coupon of 8.50% (paid semi-annually) and par of $1,000. The market interest rate is 8.20%. 
 6. A 16-year bond has a coupon of 5.20% and par of $1,000. The price of this bond is $1,025.16. Find the yield to maturity of this bond. 
 7. A 20-year zero coupon bond has a par of $1,000. The price of this bond is $364.16. Find the yield to maturity of this bond. 
 9. Find the price and current yield of the following three bonds. (a) Ma

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Par ValueTenorCoupon RateMarket Interest RatePeriodic CouponCurrnet Price1000147.50%7.21%75$1,025.05Par ValueTenorMarket Interest RateCurrnet Price1000147.21%$377.32Par ValueTenorMarket Interest RateCurrnet Price1000147.70%$353.98Par ValueTenor (4*4)Coupon Rate (Quarter)Market Interest Rate (Quarter)Periodic CouponCurrnet Price1000162.11%1.95%21.1$1,021.81Par ValueTenor (6*2)Coupon Rate (Semi-Annual)Market Interest Rate (Semi-Annual)Periodic CouponCurrnet Price1000124.25%4.10%42.5$1,014.00Par ValueTenorCoupon RateCurrnet PricePeriodic CouponYield To Maturity1000165.20%1025.16524.97%Par ValueTenorCurrent Price100020364.16Yield To Maturity5.18%Par ValueTenorCoupon RateMarket Interest RatePeriodic CouponCurrnet PriceCurrent Yield1000106.56%5.98%65.6$1,042.736.29%Par ValueTenorCoupon RateMarket Interest RatePeriodic CouponCurrnet PriceCurrent Yield1000125.56%6.28%55.6$940.555.91%Par ValueTenorCoupon RateMarket Interest RatePeriodic CouponCurrnet PriceCurrent Yield1000207.56%6.98%75.6$1,061.547.12%Current TimePar ValueTenorCoupon RateMarket Interest RatePeriodic CouponCurrnet PriceAfter Two YearPar ValueTenorCoupon RateMarket Interest RatePeriodic Coupon1000106.56%5.98%65.6$1,042.73100086.56%5.16%65.6Currnet Price$1,089.90Total Interest IncomeCapital Gain IncomeTotal Income$ 131.20$ 47.17$ 178.37

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