- Consider the following supply and demand for money of an economy:
- Consider the following savings and investment functions of an economy:
- Consider the following Treasury quote: 104-13+/24+. If you are the seller of the bond, at what price will you sell?
- Consider a bond paying an annual coupon of $80 with a face value of $1,000. Calculate the yield to maturity if the bond has 20 years remaining to maturity and is priced at $1,200. What would be the holding period yield if the bond is held for 15 years and sold at $1,100?
- Suppose that you bought a 14% Drexler bond with time to maturity of 9 years for $1,379.75 (semiannual coupons, interest rate=8%). After another ½ year, you sold the bond.
- Assuming that the required rate of return remained at 8%, what would the selling price be? What is the rate of return from this investment?
- Assuming that the required rate of return decreased to 7.5%, what would the selling price be? What is the rate of return from this investment?
- Consider a five-year bond paying 10 percent coupon annually. The bond is priced at $1,200.
- Find the yield to maturity.
- Find the realized yield, assuming that coupons are reinvested at the yield to maturity.
- Find the realized yield, assuming that coupons are reinvested at the following rates: r0=9%, r1=9.5%, r2=10%, r3=10.5%, r4=11%, r5=11.5%.
- Refer to part (c). Explain why the yield is different than the yield to maturity.
- An 81/2 30-year US corporate bond is callable in 12 years. It is currently sold at a price of $960. The call premium is 10 percent. The prevailing market interest rate at the call date is 8 percent.
- What is the yield to call to an investor who does not reinvest the call price at the prevailing interest rate at the call date?
- What is the yield to call to an investor who reinvests the call price at the prevailing interest rate at the call date?
- Consider a 90-day Treasury bill whose price is 94.5%.
- Find the yield on a discount basis.
- Find the yield on a coupon equivalent basis.
- Find the effective yield.
MS = 400 + 20i
MD = 2000 – 30i
Find the equilibrium interest rate.
S = 40 + 5i
I = 400 – 3i
Find the equilibrium interest rate.
must show work not just on calculator
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