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# Fin 515 Week 4 Problem Set

• Date Submitted: 11/29/2015 08:39 PM
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FIN 515 Week 4 Problem Set

FIN 515 Week 4 Problem Set
Bonds-1. Interest on a certain issue of bonds is paid annually with a coupon rate of 8%. The bonds have a par value of \$1,000. The yield to maturity is 9%. What is the current market piece of these bonds? The bonds will mature in 5 years.
Bonds-2. A certain bond has 12 years left to maturity. Interest is paid annually at a coupon rate of 10%. The bonds are currently selling for \$850. What is their YTM?
Bonds-3. A certain bond pays a semiannual coupon rate at a 10% annual rate. The bond has a par value of \$1,000. There are eight years to maturity. The yield to maturity is 9%. What is the current price of the bond?
Bonds-4. A particular corporate bond has a par value of \$1,000. Coupon payments are \$40 and are paid twice a year. Seven years are left on the life of the bond.The YTM is 9%. What is the price of the bond?
Bond-5. A given bond has 5 years to maturity. It has a face value of \$1,000. It has a YTM of 5% and the coupons are paid semiannually at a 10% annual rate. What does the bond currently sell for?
Bond-6. A given bond has five years left to maturity. Interest is paid annually and the annual coupon rate is 9%. The par value of the bond is \$1,000. The bond currently sells for \$1,000. What is the yield to maturity?
9-1.Assume Evco, Inc., has a current price of \$50 and will pay a \$2 dividend in 1 year, and its equity cost of capital is 15%. What price must you expect it to sell for right after paying the dividend in 1 year in order to justify its current price?
9-5.NoGrowth Corporation currently pays a dividend of \$2 per year, and it will continue to pay this dividend forever. What is the price per share if its equity cost of capital is 15% per year?
9-6.Summit Systems will pay a dividend of \$1.50 this year. If you expect Summit’s dividend to grow by 6% per year, what is its price per share if its equity cost of capital is...