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Math 400 - Theory of Interest Homework #18 NAME:__________________________________ 1. A five-year bond has face value $1000 with coupons at 12% convertible semi-annually. a. Suppose the redemption value is $950, and the bond is bought to yield 9% convertible semi-annually. Find the purchase price by using the basic formula, the premium/discount formula, the base amount formula, the Makeham formula. b. Suppose the redemption value is $950, and the bond is bought to yield 9% convertible semi-annually. Find either the amount of premium or the amount of discount, whichever is appropriate. c. Suppose the redemption value is C, and the bond is bought to yield 9% convertible semi-annually. Find the value of C for which the bond is not sold at either a premium or a discount. d. Suppose the redemption value is C, and the bond is bought to yield 9% convertible semi-annually. Find the value of C for which the price is equal to the face value. e. Suppose the redemption value is $950, and the bond is bought to yield 15% convertible semi-annually. Find the purchase price by using the basic formula, the premium/discount formula, the base amount formula, the Makeham formula. f. Suppose the redemption value is $950, and the bond is bought to yield 15% convertible semi-annually. Find either the amount of premium or the amount of discount, whichever is appropriate. g. Suppose the redemption value is C, and the bond is bought to yield 15% convertible semi-annually. Find the value of C for which the bond is not sold at either a premium or a discount. h. Suppose the redemption value is C, and the bond is bought to yield 15% convertible semi-annually. Find the value of C for which the price is equal to the face value. i. Suppose the redemption value is $950. If the price is $900, use the Excel Solver or the Finance option on the TI calculator to find the yield rate convertible semi-annually. MORE j. Suppose the redemption value is $950. If the price is $1100, use the Excel Solver or the Finance option on the TI calculator to find the yield rate convertible semi-annually. 2. Construct a bond amortization table for a $1000 two-year bond with 7% coupons paid semi-annually bought to yield 8% semi-annually. 3. Construct a bond amortization table for a $1000 two-year bond with 7% coupons paid semi-annually bought to yield 6% semi-annually.