## Description

Q1.Watters Umbrella Corp. issued 15-year bonds 2 years ago at a coupon rate of 5.6 percent. The bonds make semiannual payments. If these bonds currently sell for 90 percent of par value, what is the YTM? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

YTM %

Q2.Rhiannon Corporation has bonds on the market with 15.5 years to maturity, a YTM of 6.20 percent, and a current price of $1,039. The bonds make semiannual payments.

What must the coupon rate be on these bonds? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Coupon rate %

Q3.Treasury bills are currently paying 6 percent and the inflation rate is 3.30 percent.

What is the approximate real rate of interest? (Round your answer to 2 decimal places. (e.g., 32.16))

Approximate real rate %

What is the exact real rate? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Exact real rate %

Q4.The real rate is 4.3 percent and the inflation rate is 5.9 percent.

What rate would you expect to see on a Treasury bill? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Treasury bill rate %

Q5.You purchases a bond with a coupon rate of 8.4 percent and a clean price of $930.

If the next semiannual coupon payment is due in two months, what is the invoice price? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Invoice price $

Q6.Suppose the following bond quote for IOU Corporation appears in the financial page of todayâ€™s newspaper. Assume the bond has a face value of $1,000 and the current date is April 15, 2012.

Company (Ticker) Coupon Maturity Last Price Last Yield EST Vol (000s)

IOU (IOU) 7.0 Apr 15, 2028 104.26 ?? 1,841

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What is the yield to maturity of the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

YTM %

What is the current yield? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Current yield %

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