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1.) The real risk-free rate is 3.5%. Inflation is expected to be 2.05% this year, 3.95% next year, and 2.65% thereafter. The maturity risk premium is estimated to be 0.05 (t - 1)%, where t = number of years to maturity. What is the yield on a 7-year Treasury note? Do not round your intermediate calculations. Round your answer to two decimal places.

2.) Bond X is noncallable and has 20 years to maturity, a 11% annual coupon, and a $1,000 par value. Your required return on Bond X is 10%; if you buy it, you plan to hold it for 5 years. You (and the market) have expectations that in 5 years, the yield to maturity on a 15-year bond with similar risk will be 11.5%. How much should you be willing to pay for Bond X today? (Hint: You will need to know how much the bond will be worth at the end of 5 years.) Do not round intermediate calculations. Round your answer to the nearest cent.

3.) A 6% semiannual coupon bond matures in 4 years. The bond has a face value of $1,000 and a current yield of 6.6863%. What is the bond's price? Do not round intermediate calculations. Round your answer to the nearest cent. What is the bond's YTM? Round your answer to two decimal places

4.)

Pelzer Printing Inc. has bonds outstanding with 19 years left to maturity. The bonds have a 7% annual coupon rate and were issued 1 year ago at their par value of $1,000. However, due to changes in interest rates, the bond's market price has fallen to $890.20. The capital gains yield last year was -10.98%.

a) What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places.

b) For the coming year, what is the expected current yield? (Hint: Refer to footnote 7 for the definition of the current yield and to Table 7.1.) Do not round intermediate calculations. Round your answer to two decimal places. c) For the coming year, what is the expected capital gains yield? Round your answer to two decimal places.

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