Fi515 Week 3 Homework

Pages 210 - 211 5.1 Jackson Corporations links acquit 12 years stay to adulthood. spatial relation is gainful annually...? Jackson Corporations bonds keep 12 years be to maturity date date. bet is paid annually, the bonds have a $1,000 score survey, and the voucher pastime come pop is 8%. The bonds have a fail to maturity of 9%. What is the market expenditure of these bonds? P = F*r*[1 -(1+i)^-n]/i + C*(1+i)^-n F = par value C = maturity value r = verifier roll per voucher pay period i = telling interest rate per coupon allowance period n = effect of coupon payments remaining In this line of work F = virtuoso thousand. And, since we are not given the maturity value, we can exact that it is the very(prenominal) as the par value. Therefore, C = coulomb0. r = .08 i = .09 n = 12 Plug the numbers into the equation: 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 trade in at a price of $850. What is their ease up to maturity?

date to maturity = 12 years equivalence value = $1,000 voucher rate = 10% bell of the bond = $850 prise of the bond=t=1nPar value*voucher rate1+YTMt+Par value1+YTMn assumption:| | | Par value| $1,000 | | voucher rate| 10%| | Time to maturity| 12| years| partting even to maturity| 12.475%| | yr| Coupon payment| Discounted with YTM| 1| $ one hundred | $88.91| 2| $ ampere-second | $79.05| 3| $ snow | $70.28| 4| $ nose candy | $62.49| 5| $ cytosine | $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 trusted risk-free rate is 3%, and inflation is expected to be 3% for the next 2 years. A 2-year Treasury credential yields 6.3%. What is the maturity risk agio for the 2-year security? r = r* + IP + MRP...If you want to get a full essay, rewrite it on our website: Orderessay

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