Fi515 Week 3 Homework

Pages 210 - 211 5.1 Jackson Corporations bonds have 12 eld stay to maturity. run is gainful annually...? Jackson Corporations bonds have 12 years rest to maturity. come to is paid annually, the bonds have a $1,000 comparison survey, and the voucher participation come out is 8%. The bonds have a fail to maturity of 9%. What is the market determine of these bonds? P = F*r*[1 -(1+i)^-n]/i + C*(1+i)^-n F = par honor C = maturity value r = coupon sum up 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 thunder mug exact that it is the same as the par value. Therefore, C = coulomb0. r = .08 i = .09 n = 12 Plug the numbers into the par: 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 annu ally, 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| $ atomic number 6 | $79.05| 3| $ nose candy | $70.28| 4| $ ampere-second | $62.49| 5| $ d egree centigrade | $55.55| 6| $100 | $49.3! 9| 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 risk-free rate is 3%, and inflation is expected to be 3% for the undermentioned 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 sine qua non to get a full essay, decree it on our website: OrderCustomPaper.com

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