FIN201 - CORPORATE FINANCE

72-HOUR ASSIGNMENT #3
Note:

- This assignment covers Session 5 - Bond Valuation (Chapter 8).

- Cover Sheet and Peer Review Form must be attached with this assignment.
- Answers to the questions are typed in Microsoft Word, which is then converted into PDF
for submissions.

Question 1 (5 marks)

BP CORP has bonds on the market with 13 years to maturity, a YTM of 7.6 percent, and a
current price of $901.98. The bonds make semiannual payments and have a face value of
$1,000. What is the coupon rate?

Question 2 (5 marks)

A bond with a coupon rate of 9%/year, paid semiannually. The yield to maturity is 3.5
percent and the maturity date is 10 years from today. What is the market price of this bond
if the face value is $1,000?

Question 3 (5 marks)

WSU has 7%, semiannual coupon bonds outstanding. The current market price of the bond is
$1,023.46 and a yield to maturity of 6.72%. How many years is it until these bonds mature given
the par value is $1,000?

Question 4 (5 marks)

ACB issued 20-year bonds 3 years ago at a coupon rate of 8.5 percent. The bonds make semiannual
payments. If these bonds currently sell for 91.4 percent of par value, what is the YTM?

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