Reading 67: Introduction to the Valuation of Fixed Income

36.An investor plans to buy a 10-year, $1,000 par value, 8 percent semiannual coupon bond. If the yield to maturity of the bond is 9 percent, the bond’s value is:

A)   $934.96.

B)   $935.82.

C)   $1,000.00.

D)   $1,067.95.

37.Georgia-Pacific has $1,000 par value bonds with 10 years remaining maturity. The bonds carry a 7.5 percent coupon that is paid semi-annually. If the current yield to maturity on similar bonds is 8.2 percent, what is the current value of the bonds?

A)   $1,123.89.

B)   $569.52.

C)   $952.85.

D)   $971.75.

38.Value a semi-annual, 8 percent coupon bond with a $1,000 face value if similar bonds are now yielding 10 percent? The bond has 10 years to maturity.

A)   $875.38.

B)   $1,000.00.

C)   $1,373.87.

D)   $837.45.