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6 Interest Rate and Valuation Problems Essay

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Below is an essay on "6 Interest Rate and Valuation Problems" from Anti Essays, your source for research papers, essays, and term paper examples.

Please show me how to solve these 6 Interest Rate and Valuation problems, using the
BAII Plus Professional calculator, if possible.   If not, please show me the math work Thanks!
3. P7-5 Coupon Rates [LO2]
Kiss the Sky Enterprises has bonds on the market making annual payments, with 13 years to maturity, and selling for $1,045. At this price, the bonds yield 7.5 percent. What must the coupon rate be on the bonds? |

| 8.15% |
| 7.50% |
| 7.71% |
| 8.05% |
| 16.11% |

13.   P7-8 Coupon Rates [LO2]
Ashes Divide Corporation has bonds on the market with 14.5 years to maturity, a YTM of 6.8 percent, and a current price of $924. The bonds make semiannual payments. What must the coupon rate be on these bonds? (Do not round your intermediate calculations.) |

| 12.90% |
| 6.07% |
| 5.97% |
| 11.92% |
| 6.46% |

6.   P7-17 Interest Rate Risk [LO2]
Bond J is a 4 percent coupon bond. Bond K is a 12 percent coupon bond. Both bonds have nine years to maturity, make semiannual payments, and have a YTM of 8 percent. |

Requirement 1: |
(a) | If interest rates suddenly rise by 2 percent, what is the percentage price change of Bond J? |
Answer choices: 14.21%, -12.13%, -13.06%, -39.05%, -6.98%

(b) | If interest rates suddenly rise by 2 percent, what is the percentage price change of Bond K? |
Answer choices:   -10.26%, -10.88%, 11.89%, 14.42%, 31.36%

Requirement 2: |
(a) If interest rates suddenly fall by 2 percent, what is the percentage price change of Bond J? |
Answer choices:   14.17%, -28.09%, -12.17%, 15.49%, -6.53%

(b) | If interest rates suddenly fall by 2 percent, what is the percentage price change of Bond K? |
Answer choices:   16.85%, -10.30%, 12.72%, 11.85%, 45.69%

38.   P7-16 Interest Rate Risk [LO2]
Both Bond Sam and Bond Dave have 9 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 3 years to maturity, whereas Bond Dave has 20 years to maturity. (Do not round your...

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