Question details

Payments are semiannual.) (Do not round intermediate calculations and round
$ 15.00

1.  Calculate the price of a 5.4 percent coupon bond with 10 years left to maturity and a market interest rate of 5.0 percent. (Assume interest payments are semiannual.) (Do not round intermediate calculations and round your final answer to 2 decimal places.)

 

  Bond price $   
Is this a discount or premium bond?
Discount bond

Premium bond

 

2.  What’s the current yield of a 4.20 percent coupon corporate bond quoted at a price of 101.78?

 

 

3. What’s the taxable equivalent yield on a municipal bond with a yield to maturity of 3.8 percent for an investor in the 28 percent marginal tax bracket?

 

4.  A client in the 37 percent marginal tax bracket is comparing a municipal bond that offers a 5.70 percent yield to maturity and a similar-risk corporate bond that offers a 7.05 percent yield.

  
Determine the equivalent taxable yield. (Round your answer to 2 decimal places.)
  
  Equivalent taxable yield  %  
  
Which bond will give the client more profit after taxes?
 
Municipal bond

Corporate bond

 

 

5.  A 7.50 percent coupon bond with 13 years left to maturity is priced to offer a 8.2 percent yield to maturity. You believe that in one year, the yield to maturity will be 7.8 percent. What is the change in price the bond will experience in dollars? 

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