Ponzi corporation has bonds on the market with 14.5 years to

Problem 1:

Interpreting Bond Yields.  Is the yield to maturity on a bond the same thing as the required return?  Is the YTM the same thing as the coupon rate?  Suppose today a 10 percent coupon bond sells at par.  Two years from now, the required return on the same bond is 8 percent.  What is the coupon rate of the bond then?  The YTM?

Problem 3:

Valuing Bonds.  Even though most corporate bonds in the United States make coupon payments semiannually, bonds issued elsewhere often have annual €1,000, 25 years to maturity, and a coupon rate of 6.4 percent paid annually.  If the yield to maturity is 7.5 percent, what is the current price of the bond?

Problem 8:

Coupon Rates.  Ponzi Corporation has bonds on the market with 14.5 years to maturity, a YTM of 6.1 percent, and a current price of 1,038.  The bonds make semiannual payments.  What must the coupon rte be on these bonds?

Problem 10:

Inflation and Nominal Returns.  Suppose the real rate is 2.5 percent and the inflation rate is 4.1 percent.  What rate would you expect to see on a Treasury bill?

Problem 12:

Nominal versus Real Returns.  Say you own an asset that had a total return last year of 10.7 percent.  If the inflation rate last year was 3.7 percent, what was the real return?

Problem 14:

Using Treasury Quotes.  Is this a premium or discount bond? What is the current yield?  What is it’s yielded to maturity?  What is the bid-ask spread?

Maturity:  August 2029

Coupon:  6.125

Bid:  123:13

Asked:  123:15

Change: -58

Asked Yield: 4.2790


Problem 17:

Interest Rate Risk.  Bond J is a 3 percent coupon bond.  Bond K is a 9 percent coupon bond.  Both bonds have 15 years to maturity, make semiannual payments, and have a YTM of 6 percent.  If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds?  What if rates suddenly fall by 2 percent instead?  What does this problem tell you about the interest rate risk of lower-coupon bonds?

Problem 18:

Bond Yields.  Martin Software has 9.2 percent coupon bonds on the market with 18 years to maturity.  The bonds make semiannual payments and currently sell for 106.8 percent of par.  What is the current yield on the bonds?  They YTM? The effective annual yield?

Problem 26:

Zero Coupon Bonds.  Suppose your company needs to raise $45 million and you want to issue 30-year bonds for this purpose.  Assume the required return on your bond issue will be 6 percent, and you’re evaluating two issue alternatives: a 6 percent semiannual coupon bond and a zero coupon bond.  Your company’s tax rate is 35 percent.

a.       How many of the coupon bonds would you need to issue to raise the $45 million?  How many of the zeros would you need to issue?

b.      In 30 years, will your company’s repayment be if you issue the coupon bonds?  What if you issue the zeroes?

c.       Based on your answers in (a) and (b), why would you ever want to issue the zeroes?  To answer, calculate the firm’s aftertax cash outflows for the first year under the two different scenarios.  Assume the IRS amortization rules apply for the zero coupon bonds.

Problem 28:

Real Cash Flows.  You want to have $2 million in real dollars in an account when you retire in 40 years.  The nominal return on your investment is 10 percent and the inflation rate is 3.8 percent.  What real amount must you deposit each year to achieve your goal?

Punctual Essays
Calculate your paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.


Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.


Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.


Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.


Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.