|———–|————–|————–|————–| 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 =