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Question 3

One year ago, Carson Industries issued a 10-year, $1,000 PAR coupon bond at its PAR value. This Bond's annual coupon rate is 13%. Coupons are paid 2 times in a year. The Bond is currently trading at $900. However, this bond can be called in 6 years from today at a price of $1065

What is the YTC (Yield to Call) of this Bond? In other words, what is the Bond investor's return if the Bond is called? Enter your answer in the following format: 0.1234 Hint: Answer is between 0.1505 and 0.1816

Question 4

Consider two Bonds with $1,000 face value: 10-year and 30-year maturity. Both Bonds offer 10% annual coupon, paid once a year. Assume that interest rates, hence YTM (Yield to Maturity) changed from 6% to 7%.

By what percentage will the price of the 30-year Bond change? Enter your answer in the following format: + or - 0.1234 Hint: Answer is between -0.1024 and -0.1265

Question 5

Suppose the US government is issuing a $1,000 PAR value coupon bond today. This bond will mature in 20 years from today. This Bond's annual coupon rate is 10%. Coupons are paid 2 times in a year. The investors expect 4% annual return on this bond.

What is the present value of this Bond? Enter your answer in the following format: 1234.56 Hint: Answer is between 1675.01 and 1966.32

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