Reference no: EM132483520

Question 1.) Lycan, Inc., has 8.4 percent coupon bonds on the market that have 6 years left to maturity. The bonds make annual payments and have a par value of $1,000.

If the YTM on these bonds is 10.4 percent, what is the current bond price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current Bond Price $

Question 2.) Say you own an asset that had a total return last year of 16 percent. Assume the inflation rate last year was 4.2 percent.

What was your real return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Question 3.) Both Bond Bill and Bond Ted have 9.2 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 4 years to maturity, whereas Bond Ted has 21 years to maturity. Both bonds have a par value of 1,000.

1. If interest rates suddenly rise by 3 percent, what is the percentage change in the price of these bonds? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
2. If rates were to suddenly fall by 3 percent instead, what would be the percentage change in the price of these bonds? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Question 4.) PK Software has 9.4 percent coupon bonds on the market with 25 years to maturity. The bonds make semiannual payments and currently sell for 112.75 percent of par.

1. What is the current yield on PK's bonds? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
2. What is the YTM? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
3. What is the effective annual yield? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Question 5.) You find the following corporate bond quotes. To calculate the number of years until maturity, assume that it is currently January 15, 2016. The bonds have a par value of $2,000.

Company Coupon Maturity Last Last EST $

(Ticker) Price Yield VOL (000'S)

Xenon, Inc. (XIC) 6.300 Jan 15, 2029 94.273 ?? 57,371

Kenny Corp. (KCC) 7.210 Jan 15, 2026 ?? 6.20 48,950

Williams Co. (WICO) ?? Jan 15, 2032 96.825 6.45 43,811

1. What is the coupon rate for the Williams Co. bond? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)