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Chapter 4: Q.15 (page 134)
Calculate the present value of a $1,300 discount bond with seven years to maturity if the yield to maturity is 8%.
The present value of bond is $758.53
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Would $200, which is to be received in exactly one year, be worth more to you today when the interest rate is 12% or when it is 17%?
What is the formula used to calculate the yield to maturity on a 20-year coupon bond with a current yield of 12% and \(1,000 face value that sells for \)2,500
What is the yield to maturity on a simple loan for \(1,500 that requires a repayment of \)15,000 in five years?
Consider a coupon bond that has a \(900 par value and a coupon rate of 6%. The bond is currently selling for \)860.15 and has two years to maturity. What is the bond鈥檚 yield to maturity?
Go to the St. Louis Federal Reserve FRED database, and find data on the interest rate on a four-year auto loan (TERMCBAUTO48NS). Assume that you borrow \(20,000 to purchase a new automobile and that you finance it with a four-year loan at the most recent interest rate given in the database. If you make one payment per year for four years, what will the yearly payment be? What is the total amount that will be paid out on the \)20,000 loan?
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