1. Bond Example 1 Two years ago Jamaica Jim’s Cruise Lines (BB bond rating) issued $100m worth of $1,000 bonds with an original maturity of 4 years and annual coupon payments. The bonds have a CPN Rate of 6% since that was the cost of debt (market interest rate, r d ) for a 4-year loan for all BB rated firms at the time. The current market interest rate (rd) for BB bonds with 2 year maturity is 5%. (i.e. the current cost of a 2-year loan for all BB rated firms is 5%). What is the current fair market value of these bonds?

2. Bond Example 2 Multiple compounding periods per year: What is the current fair market value of a 3-year, $10,000 Face Value bond that has a coupon rate of 6% and has semiannual coupon payments? The current market interest rate (rd) for this bond is 7%.

3. Bond Example 3 The current price of a 4-year, $10,000 AA bond issued by GM paying an annual coupon rate of 5% APR. is $9,913.89. What is the yield to maturity (YTM) of this bond?

4. Bond Example 4 The current FMV of a $1,000 BB bond issued by Home Depot paying a semi-annual coupon rate of 6.2500% APR with 2 years left to maturity is $973.23. What is the yield to maturity of this bond?

5. Bond Example 5 Company x has a $1000 semiannual bond with a 8% coupon rate, 10 years to maturity. – If the current market price is 1034.74, what is the yield to maturity? – If the market rate changes to 9%, what is the value of the Bond?

6. Bond Example 6 A Bond paying an annual coupon of 7% has thirty years until maturity: – If the market rate is currently 6.5%, what is the price of the bond? This bond is said to be trading at?

7. Bond Example 7 A $1000 face value bond with a maturity of 6 years and a 7.875% coupon rate paying quarterly interest payments is currently selling for $992.57. What is the yield to maturity of the bond?

8. Bond Example 8

9. Bond Example 9

10. Bond Example 10 A $1000 face value bond with a maturity of 11.5 years and a 8.0% coupon paying semi-annual interest payments is selling at 92.50% of face value, It has 11.5 years to maturity. What is the YTM of this bond?