Bond j has a coupon rate of 4 percent

Heginbotham Corp. issued 10-year bonds two years ago at a coupon rate of 7.2 percent. The bonds make semiannual payments. If these bonds currently sell for 102 percent of par value, what is the YTM? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

YTM

%

Bond J has a coupon rate of 4 percent and Bond K has a coupon rate of 10 percent. Both bonds have 18 years to maturity, make semiannual payments, and have a YTM of 7 percent.

If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Percentage change in price of Bond J

%

Percentage change in price of Bond K

%

What if rates suddenly fall by 2 percent instead? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

Percentage change in price of Bond J

%

Percentage change in price of Bond K

%

You purchase a bond with a coupon rate of 8.1 percent and a clean price of $860.

If the next semiannual coupon payment is due in two months, what is the invoice price? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)

Invoice price

$

Suppose the following bond quotes for IOU Corporation appear in the financial page of today’s newspaper. Assume the bond has a face value of $2,000 and the current date is April 19, 2015.

Company (Ticker)

Coupon

Maturity

Last Price

Last Yield

EST Vol (000s)

IOU (IOU)

7.4

Apr 19, 2028

103.46

??

1,833

What is the yield to maturity of the bond? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

YTM

%

What is the current yield? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Current yield

%

You want to have $4 million in real dollars in an account when you retire in 30 years. The nominal return on your investment is 11 percent and the inflation rate is 4.9 percent.

What real amount must you deposit each year to achieve your goal? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)