Fi515 Week 3 Homework

Pages 210 - 211 5.1 Jackson Corporations bonds have 12 old age stay to maturity. bet is gainful annually...? Jackson Corporations bonds have 12 years remain to maturity. involution is paid annually, the bonds have a $1,000 equating survey, and the voucher touch on come out is 8%. The bonds have a fail to maturity of 9%. What is the market terms of these bonds? P = F*r*[1 -(1+i)^-n]/i + C*(1+i)^-n F = par treasure C = maturity value r = voucher drift per coupon pay period i = in force(p) interest rate per coupon allowance period n = number of coupon payments remaining In this problem F = one thousand. And, since we are not given the maturity value, we evict exact that it is the same as the par value. Therefore, C = coulomb0. r = .08 i = .09 n = 12 Plug the numbers into the comparability: light speed0*.08 * (1 - 1.09^-12)/.09 + coulomb0*1.09^-12 = $928.39 5.2 Wilson Wonderss bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10% the bonds sell at a price of $850. What is their ease up to maturity?

date to maturity = 12 years Par value = $1,000 voucher rate = 10% Price of the bond = $850 prise of the bond=t=1nPar value*Coupon rate1+YTMt+Par value1+YTMn assumption:| | | Par value| $1,000 | | Coupon rate| 10%| | Time to maturity| 12| years| Yield to maturity| 12.475%| | yr| Coupon payment| Discounted with YTM| 1| $ one hundred | $88.91| 2| $ speed of light | $79.05| 3| $century | $70.28| 4| $ speed of light | $62.49| 5| $ c ytosine | $55.55| 6| $100 | $49.39| 7| $! 100 | $43.91| 8| $100 | $39.04| 9| $100 | $34.71| 10| $100 | $30.86| 11| $100 | $27.44| 12| $100 | $24.40| 12| $1,000 | $243.97| | Value of the bond| $850.01| 5-6 The trustworthy chance-free rate is 3%, and inflation is expected to be 3% for the close 2 years. A 2-year Treasury credential yields 6.3%. What is the maturity risk premium for the 2-year security? r = r* + IP + MRP...If you insufficiency to get a full essay, decree it on our website: OrderCustomPaper.com

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