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10. New Lenox Neuroscience, Inc. issued $600 million worth of 20-year bonds three years ago. Each bond has a $1,000 par value (it sold initially for $1,000 and will return $1,000 at maturity) and a 5.6% annual coupon interest rate, but with interest paid every six months so be sure to compute semiannually, and compute with enough decimal places to assure accuracy! If investors expected yield to maturity (which we treat as an effective annual rate, or EAR, measure) is 6.2961%, then at what price would we expect each of these semiannual-interest-payment bonds to sell today? [In subsequent questions 11 and 12 you will compute a coupon bonds theoretical value based on different coupon rate, remaining life, and yield to maturity figures.]

• A. $960.82
• B. $937.50
• C. $1,065.24
• D. $927.98
• E. $1,000.00

11. . Skokie Ski Industries issued $800 million worth of 50-year bonds nine years ago. Each bond has a $1,000 par value (it sold initially for $1,000 and will return $1,000 at maturity) and a 6.8% annual coupon interest rate, but with interest paid every six months so be sure to compute semiannually, and compute with enough decimal places to assure accuracy! If investors expected yield to maturity (which we treat as an effective annual rate, or EAR, measure) is 5.8841%, then at what price would we expect each of these semiannual-interest-payment bonds to sell today? [In questions 10 and 12 you did/will compute a coupon bonds theoretical value based on different coupon rate, remaining life, and yield to maturity figures.]

• A. $1,141.22
• B. $862.42
• C. $1,000.00
• D. $1,119.01
• E. $1,155.87

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