PRACTICE QUESTIONS ON BONDS

1. The Inkulenu industries bond has a 10% coupon rate and a Ghs1000 face value. Interest is paid
annually, and the bond has 20 years to maturity. If investors require a 12% yield, what is the
bond’s value?
2. WIUC bond carries an 8% coupon, paid semiannually. The par value is Ghs1000, and the bond
matures in 6 years. If the bond currently sells for Ghs911.37, what is its yield to maturity?
3. The Anita Corporation has just issued a Ghs1000 par value zero coupon bond with an 8% yield to
maturity, due to mature fifteen years from today (assume annual compounding).
a. What is the market price of the bond?
b. If interest rates remain constant, what will be the price of the bond in three years?
c. If interest rates rise to 10%, what will be the price of the bond in three years?
4. Complete the information requested for each of the following Ghs1000 face value, zero coupon
bonds, assuming annual compounding:
Bond Maturity (years) yield percent Price (Ghs)
A 20 12 ?
B ? 8 601
C 9 ? 350