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3. Neco's limited issued a 30 years bond. Currently, there are 13 years remaining to maturity with the yield to maturity of 17.5%. Given that the interest is paid annually, the bonds have $1000 par value, and the coupon interest rate is 14.5%. Calculate the current market value of the bond. Also, identify whether it is a discount bond or a premium bond. 4. Kaashi Foods Limited has issued bonds that mature in 12 years with the face value of $1,000. The bonds have a yield to maturity of 8% and a coupon rate of 12%, payable quarterly. Calculate the market price of the bonds. 5. T\&T Corporation bonds have 13 years remaining to maturity with a face value of $1,000. Given that the coupon interest is 15% and it is paid annually, calculate the bonds yield to maturity if their selling price is $940. 6. Mr. Jim works for a mutual fund which has a part of its holdings invested in bonds. While looking for investment opportunities, Mr. Jim finds a bond which has 25 years to maturity, 13% annual coupon, $1,000 face value and a required return of 10%. Suppose he wants to buy this bond and hold it for 10 years. He expects that in 10 years, the rate of return on a 15 -year bond with similar risk will be 7%. What is the present value of the bond (for the first 10 years use 25 -year rate and for remaining use 15 -year rate)? 7. The Miller Corporation has $1,000 bonds on the market which have 8 years remaining to maturity. If the coupon interest rate is 10.25% and it is paid yearly, a) calculate the fair value of the bond if the yield to maturity is 9%. b) if the bond is currently selling for $890, is there an arbitrage opportunity? If yes, write 'Buy' or 'Sell'. Otherwise, write 'No

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