9-3 Calculate the value of a bond that matures in 12 years and has a $1000 par

value. The coupon rate is 8% and the markets require yield to maturity on a
comparable risk bond is 12%.

9-4 Calculate the value of a bond that matures in 10 years and has a $1000 par
value. The annual coupon interest rate is 9% and the markets required yield to
maturity on comparable risk bond is 15%. What would be the value of this bond if
it paid interest semi-annually?

9-5 Enterprise, Inc. bonds have a 9% annual coupon rate. The interest is paid semi-
annually and the bonds mature in 8 years. Their par value is $1000. If the markets
required yield to maturity on a comparable risk bond is 8%, what is the value of the
bond? What is its value if the interest paid annually?

9-6 Pybus, Inc. is considering issuing bonds that will mature in 20 years with an
8% annual coupon rate. Their par value will be $1000, and the interest will be
paid semi-annually. Pybus is hoping to get a AA rating on its bonds and, if it
does, the yield to maturity on similar AA bonds is 7.5%. However, Pybus is not
sure whether the new bonds will receive a AA rating. If they receive an A
rating, the yield to maturity on similar A bonds is 8.5%. what will be the price of
these bonds if they receive either an A or a AA rating?

9-7 The market price is $900 for a 10 years bond($1000 par value)that pays 8%
annual interest, but makes interest payments on a semi-annual basis(4% semi-
annually). What is the bonds yield to maturity?

9-8 A bond’s market price is $750. It has a $1000 par value, will mature in 8
years, and has a coupon interest rate of 9% annual interest, but makes its
interest payments semi-annually. What is the bonds yield to maturity? What
happens to the bond’s yield to maturity if the bond matures in 16 years? What
if matures in 4 years?

9-9 Fitzgerald’s 20 years bonds pay 9% interest annually on a $1000 par value. If
bonds sell at $945, what is the bonds yield to maturity? What would be the
yield to maturity if the bonds paid interest semi-annually? Explain the
difference.

9-10 Doisneau20 years bonds have a 10% annual coupon interest, make
interest payment on a semi-annual basis, and have a $1000 par value. If the
bonds are trading with a 12% markets required yield to maturity, is the bond
premium or discount bond? Explain your answer what is the price of the bond?

9-11 5 years ago XYZ international issued some 30 year zero coupon bonds that
were priced with a markets required yield to maturity of 8%. What did these
bonds sell for when they were issued? Now that 5 years have passed and the
markets required yield to maturity on these bonds have climbed to 10%, what
are they selling for? If the markets required yield to maturity had fallen to 6%?
What would they have been selling for?

9-12 Hoyden Co.’s bonds mature in 15 years and pay 8%interest annually. If you
purchase the bonds for $1175, what is their yield to maturity?

9-13 Fingen’s 14 years, $1000 par value bonds pay 9%interest annually. The
market price of the bonds is $1100 and the markets required yield to maturity
on a comparable risk bond is 10%.

A- Compute the bonds yield to maturity.

B- Determine the value of the bond to you, given your require rate of return.

C- Should you purchase the bond?

9-14 Abner corporations bonds mature in 15 years and pay 9% interest

annually. If you purchase the bonds for $1250, what is your yield to maturity?

9-15 Vail Inc.’s7 year $1000 par bonds pay 9% interest. The markets required
yield to maturity on a comparable risk bond is 7%. The current market price for
the bond is $1100.

A- Determine the yield to maturity.

B- What is the value of the bonds to you given the yield to maturity on a
comparable risk bond?

C- Should you purchase the bond at the current market price?

9-16 The Saleemi corporations’ $1000 bonds pay 5% interest annually and have
12 years until maturity. You can purchase the bond for $915.

A- What is the yield to maturity on this bond?

B- Should you purchase the bond if the yield to maturity on a comparable risk
bond is 9%?
9-17 Waco industries 15 year, $1000 par value bonds pay 8% interest annually.
The market price of the bonds is $1085, and the markets require yield to
maturity on a comparable risk bond is 10%.

A- Compute the bonds yield to maturity.

B- Determine the value of the bond to you given the markets required yield to
maturity on a comparable risk bond.

C- Should you purchase the bond?

9-18 You own a bond that pays $100 in annual interest, with a $1000 par value. It
matures in 15 years. The markets required yield to maturity on a comparable risk
bond is 12%.

A- Calculate the value of the bond.

B- How does the value change if the yield to maturity on a comparable risk bond
increase to 15% or decreases to 8%?

C- Explain the implications of your answer in part B as they relate to intrest rate
risk, premium bonds, and discount bonds.

D- Assume that the bond matures in 5 years instead of 15 years and recalculate
your answers in part B.

E- Explain the implications of your answers in part D as they relate to interest rate
risk, premium bonds, and discount bonds.

9-19 Arizona public utilities issued a bond that pays $80 in interest, with a $1000
par value. It matures in 20 years. The markets required yield to maturity on a
comparable risk bond is 7%.

A- Calculate the value of the bond.

B- How does the value change if the markets required yield to maturity on a
comparable risk bond. Increase to 10% or decrease to 6%?

C- Explain the implications of your answers in part B as they relate to interest rate
risk, premium bonds, and discount bonds.

D- Assume that the bond matures in 10 years instead of 20 years. Recomputed

your answer in part B.

E Explain the implications of your answers in part D as they relate to interest rate
risk, premium bonds, and discount bonds.
9-20 Telink corporation bonds pay $110 in annual interest, with a $1000 par value.
The bonds mature in 20 years. The markets required yield to maturity on a
comparable risk bond is 9%.

A- Calculate the value of the bond.

B- How does the value change if, the markets required yield to maturity on a
comparable risk bond (r) increase to 12% or decrease to 6%?

C- Interpret your findings in parts A and B.

9-21 Visador Corporation bonds pay $70 in annual interest, with a $1000 par value.
The bonds mature in 17 years. The markets required yield to maturity on a
comparable risk bond is 8.5%.

A- Calculate the value of the bond.

B- How does the value change if the markets required yield to maturity on a
comparable risk bond, increase to 11% or decrease to 6%?

C- Interpret your finding in parts A and B.

9-22 Stanley, Inc. issues 15 year $1000 bonds that pay $85 annually. The market
price for the bonds is $960. The markets required yield to maturity on a
comparable risk bond is 9%.

A What is the value of the bond to you?

B What happends to the value if the markets require yield to maturity on a

comparable risk bond, increase to 11% or decrease to 7%?

C Under which of the circumstances in part B should you purchase the bond?