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Which one of these applies to floating-rate bonds?

A. Bondholders can generally redeem their bonds at par at any time.

B. Coupon payments are variable while the par value is fixed.

C. Interest adjustments are accrued and paid on the maturity date.

D. Coupon payments are fixed but the par value is variable.

E. Bondholders frequently are granted a put provision at the current market price.

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Hubert Koch
Hubert KochLv2
28 Sep 2019

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Please answer questions 7 to 11 with work, thank you!


7) Cohen has issued a bond with the following characteristics: Par: $1,000; Time to maturity: 15 years; Coupon rate: 7%; Semiannual payment. What is the price of the bond if the YTM is 9%?

8) The Pane bond has 11.5 years to maturity, a YTM of 7.6%, and a current price of $1,060. The bond makes semiannual payments. What is the coupon rate on this bond?

9) What is the inflation rate if nominal return is 14% and real return is 10%?

10) Jay, Inc. and Nic Corp. both have 7% coupon bonds outstanding with semiannual payments and both are priced at par value. The Jay, Inc. bond has 2 years to maturity, while the Nic Corp. bond has 15 years to maturity. If interest rate suddenly rises from 7% to 9%, what is the percentage change in the price of these bonds? If interest rate suddenly decreases by 2%, what is the percentage change in the price of these bonds?

11. You purchase a bond with an invoice price of $950. The bond has a coupon rate of 6.8%, and there are 2 months to the next semiannual coupon date. What is the clean price of the bond?

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