Note: In these cases, use any method you want to use, or can use: guessing by hand, an IRR key on a calculator, Excel or some other math program, a web site, etc. Just find the yield, to the nearest tenth or hundredth of a percent.

Note: Some sources define various different types of yields. The standard name for a yield of the type I describe in this course is yield to maturity.

Yields on multiple-payment bonds A. A bond that costs $10,000 returns a payment of $4000 after one-year and a (final) payment of $7700 after two years. Use the quadratic formula to calculate the yield on this bond. Show your work! B. A coupon bond has a term of five years, a face value of $100,000, and a coupon rate of 3.0 percent. It is sold in the primary market for a price of $90,000. 1. Is the yield on this bond higher or lower than 3 percent? Explain how you know, without doing any calculations. 2. Calculate the coupon (annual interest) payment on this bond. 3. Calculate the yield on this bond, to the nearest tenth of a percent. "by hand," using the educated- guessing (internal rate of return) method. Note: Start with an initial guess at the yield, calculate the bond's price at this yield, and compare that price to the bond's actual price. Revise your yield guess, calculate the bond's price again, and so on. Show your work at each stage. At the end of the process, explain how you know that your value for the yield is accurate to the nearest tenth of a percent. C. Calculate the yields on the following credit instruments: 1. An annuity with a price of $200,000, a term of eight years, and an annual payment of $37,500. Find the yield to the nearest tenth of a percent. 2. A coupon bond with a price of $50,000, a term of ten years, a face value of $65,000 and a coupon rate of 4 percent. Find the yield to the nearest hundredth of a percent. 3. The bond from Problem 1.C of Assignment 2, Part B-1, which had a price of $50,000. It returned a payment of $35,000 after two years, a payment of $40,000 after five years, and a (final) payment of $25,000 after ten years. Find the yield to the nearest tenth of a percent. Yields on multiple-payment bonds A. A bond that costs $10,000 returns a payment of $4000 after one-year and a (final) payment of $7700 after two years. Use the quadratic formula to calculate the yield on this bond. Show your work! B. A coupon bond has a term of five years, a face value of $100,000, and a coupon rate of 3.0 percent. It is sold in the primary market for a price of $90,000. 1. Is the yield on this bond higher or lower than 3 percent? Explain how you know, without doing any calculations. 2. Calculate the coupon (annual interest) payment on this bond. 3. Calculate the yield on this bond, to the nearest tenth of a percent. "by hand," using the educated- guessing (internal rate of return) method. Note: Start with an initial guess at the yield, calculate the bond's price at this yield, and compare that price to the bond's actual price. Revise your yield guess, calculate the bond's price again, and so on. Show your work at each stage. At the end of the process, explain how you know that your value for the yield is accurate to the nearest tenth of a percent. C. Calculate the yields on the following credit instruments: 1. An annuity with a price of $200,000, a term of eight years, and an annual payment of $37,500. Find the yield to the nearest tenth of a percent. 2. A coupon bond with a price of $50,000, a term of ten years, a face value of $65,000 and a coupon rate of 4 percent. Find the yield to the nearest hundredth of a percent. 3. The bond from Problem 1.C of Assignment 2, Part B-1, which had a price of $50,000. It returned a payment of $35,000 after two years, a payment of $40,000 after five years, and a (final) payment of $25,000 after ten years. Find the yield to the nearest tenth of a percent