Reference no: EM132999935

1 Suppose you buy a 7% coupon, 20-year bond today when it's first issued. If interest rates suddenly rise to 15%, what happens to the value of your bond? Why?

2 Goldstream Enterprises has bonds on the market making annual payments, with nine years to maturity, and selling for $948. At this price, the bonds yield 5.9%. What must the coupon rate be on the bonds?

3 If Treasury bills are currently paying 6% and the inflation rate is 2.6%, what is the approximate real rate of interest? The exact real rate?

4 Airbutus Co. wants to issue new 20-year bonds for some much-needed expansion projects. The company currently has 8% coupon bonds on the market that sell for $930, make semiannual payments, and mature in 20 years. What coupon rate should the company set on its new bonds if it wants them to sell at par?

5 Colwood Corp. has 8% coupon bonds making annual payments with a YTM of 7.2%, current market value of $1,059.6. How many years do these bonds have left until they mature?