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Assignment 3 BA 633 (Investment Strategy) Assignment 3: Bonds (Chapters 10 & 11) Part C....

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Assignment 3 BA 633 (Investment Strategy) Assignment 3: Bonds (Chapters 10 & 11) Part C. Problems (7 points each). Show your work for full credit! 1. You bought a stock ten years ago for $20 and sold it today for $55. What is the annual rate of growth rate of retum) on your investment? Assume no cash dividends 2. An investment guarantees you a retum of 0.9 percent per month. What is the effective annual rate of return that you are guaranteed? 4. Ted owns a bond which is callable in 2.5 years. The bond has a 6 percent coupon, pays interest semiannually, has a par value of $1,000, and has a yield to call of 6.3 percent. What is the call premium if the bond currently sells for $1,035.982 | 5. Determine the durations of the following bonds. Assume that coupon payments are made annually (1) A zero-coupon bond with 10 years remaining to maturity, and a 7 percent yield to maturity (2) A bond with $1,000 par value and a 6 percent coupon rate, 3 years remaining to maturity, and a 6 percent yield to maturity

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