CHAPTER 5: FIXED INCOME SECURITIES: CHARACTERISTICS AND VALUATION

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Short Answer
	1.	Bonds from Canada Mercantile, maturing in exactly 8 years, closed trading today at $923.26. The holder of the bond receives annual interest payments of $45. After the market close, a surprise interest rate increase of 0.50% was announced. Tomorrow, bond investors will be expecting a rate of return on their investments to be 0.50% higher. What will the bond be trading at?
	2.	A debenture maturing in 50 years trades at $812.75. The annual coupon payment is $35.50. What is the present value of the coupon payment stream? What is the present value of the underlying bond?
	3.	Canadian Conglomerates senior debenture matures in 22-years and has an annual coupon payment of $42.25. The bond is callable in 12 years at a call price of $1045. The current bond price is $ 1007.55. What is the yield-to-call on this debenture?