|———–|————–|————–|————–| CFs : $ 0 $ 1,000 $ 2,000 $ 2,000 $ 2,000 ( Points : 10 )
$ 5,987 $ 6,286 $ 6,600 $ 6,930 $ 7,277
( 6 ) ( TCO B ) Suppose you borrowed $ 12,000 at a rate of 9.0 % and must repay it in four equal installments at the end of each of the next four years . How large would your payments be ? ( Points : 10 )
3,704.02 $ 3,889.23 $ 4,083.69 $ 4,287.87 $ 4,502.26
( 7 ) ( TCO D ) Which of the following statements is CORRECT ? ( Points : 10 )
( a ) If a bond is selling at a discount , the yield to call is a better measure of return than the yield to maturity . ( b ) On an expected yield basis , the expected capital gains yield will always be positive because an investor would not purchase a bond with an expected capital loss . ( c ) On an expected yield basis , the expected current yield will always be positive because an investor would not purchase a bond that is not expected to pay any cash coupon interest . ( d ) If a coupon bond is selling at par , its current yield equals its yield to maturity . ( e ) The current yield on Bond A exceeds the current yield on Bond B ; therefore , Bond A must have
( 8 ) ( TCO D ) Ezzell Enterprises ’ noncallable bonds currently sell for $ 1,165 . They have a 15-year maturity , an annual coupon of $ 95 , and a par value of $ 1,000 . What is their yield to maturity ? ( Points : 10 )
6.20 % 6.53 % 6.87 % 7.24 % 7.62 %
( 9 ) ( TCO C ) Niendorf Corporation ’ s five-year bonds yield 6.75 %, and five-year T- bonds yield 4.80 %. The real risk-free rate is r * = 2.75 %, the inflation premium for five-year bonds is IP = 1.65 %, the default risk premium for Niendorf ’ s bonds is DRP =