Chapter 10
Problem 01
Input Area:
Today’s price $1,025.00
Annual coupon payment $60.00
Time-to-maturity (years) 20.00
Par value $1,000.00
Output Area:
Yield to maturity 5.79%
Chapter 10
Problem 02
Input Area:
Yield to maturity 5.00%
Time to maturity 10
Face Value $1,000.00
Annual coupons $60.00
Output Area:
Expected Cashflows Time PV of Expected CFs PV of Exp CFs * t
$60.00 1$57.14 $57.14
$60.00 2$54.42 $108.84
$60.00 3$51.83 $155.49
$60.00 4$49.36 $197.45
$60.00 5$47.01 $235.06
$60.00 6$44.77 $268.64
$60.00 7$42.64 $298.49
$60.00 8$40.61 $324.88
$60.00 9$38.68 $348.09
$1,060.00 10 $650.75 $6,507.48
$1,050.00 $8,501.56
Duration of bond 8.10
Current market price ($1,077.22)
Chapter 10
Problem 03
Input Area:
Today’s price $975.00
Semi-annual coupon payment $25.00
Time-to-maturity (years) 20
Redemption value $1,000.00
Output Area:
Number of pmts 40
Yield to maturity 5.20%
Chapter 10
Problem 04
Input Area:
Yield to maturity 10.00%
Time to maturity 20.00
Face Value $1,000.00
Annual coupons $70.00
Output Area:
Expected Cashflows Time PV of Expected CFs PV of Exp CFs * t
$70.00 1$63.64 $63.64
$70.00 2$57.85 $115.70
$70.00 3$52.59 $157.78
$70.00 4$47.81 $191.24
$70.00 5$43.46 $217.32
$70.00 6$39.51 $237.08
$70.00 7$35.92 $251.45
$70.00 8$32.66 $261.24
$70.00 9$29.69 $267.18
$70.00 10 $26.99 $269.88
$70.00 11 $24.53 $269.88
$70.00 12 $22.30 $267.65
$70.00 13 $20.28 $263.59
$70.00 14 $18.43 $258.06
$70.00 15 $16.76 $251.36
$70.00 16 $15.23 $243.74
$70.00 17 $13.85 $235.44
$70.00 18 $12.59 $226.62
$70.00 19 $11.45 $217.47
Current market price $744.59
Chapter 10
Problem 05
Input Area:
Term to maturity (years) 15.00
Nominal annual rate of return 6.75%
Corporate tax bracket 35.00%
Average interest rate to borrow 4.25%
Percent of interest expense that is tax deductible 80.00%
Output Area:
Net after-tax return 3.69%
Chapter 10
Problem 06
Input Area:
Term to maturity (years) 15.00
Nominal annual rate of return 9.75%
Corporate tax bracket 35.00%
Average interest rate to borrow 4.25%
Percent of interest expense that is tax deductible 0.00%
Output Area:
Net after-tax return 5.50%
Chapter 10
Problem 08
Input Area:
Term to maturity in years Market yields
0.25 1.90%
0.5 2.10%
12.25%
22.51%
32.82%
53.28%
73.56%
10 3.98%
20 4.69%
30 5.25%
Output Area:
5%
6%
Market Yields
Chapter 10
Problem 09
Input Area:
Duration of bond 8.89
Market rate this morning 7.50%
Current market rate 7.25%
Output Area:
Change in market rate -0.25%
Percentage price change for bond 2.07%