FINANCE ASSIGNMENT QUESTION 1 TO QUESTION 15-A bond with face value of $500 is redeemable at par in 8 years.

Question 1Question textA bond with face value of $500 is redeemable at par in 8 years. The coupon (interest) rate is 9.8% p.a. payable half-yearly. What price should be paid for the bond by an investor (who pays tax at 30.0% on interest) to produce a net yield to maturity of 6.6% p.a. convertible half-yearly?Question 2A debenture with face value of $100 pays interest at j4 = 14% and will mature 7 years from today at par. What net yield to maturity, j4 (as a %, 2 decimal places), would an investor taxed at 30% on interest obtain if the debenture was purchased for $84.60? Use the APPROXIMATE yield formula.Question 3A debenture with face value of $100 pays interest at j4 = 14% and will mature 7 years from today at par. What net yield to maturity, j4 (as a %, 2 decimal places) would an investor taxed at 30% on interest obtain if the debenture was purchased for $860? Use LINEAR INTERPOLATION between 3% and 3.5% for the quarterly yield.Question 4A bond with face value of $100 pays interest at j2 = 7.1% and is redeemable at par on 1 June 2019. What price should be paid for the bond on 29 August 2012 by an investor liable to tax on interest at 25% who wants to earn a net yield of 5.1% p.a. effective? Use compound interest for the fractional interest period.(As the interest payments are half-yearly, the yield will need to be converted to a half-yearly rate to match the frequency of the payments. Use the unrounded yield (store it in the memory of your calculator) or your answer will probably be marked as incorrect.)Question 5A bond with face value of $100 pays interest at j2 = 7.4% and is redeemable at par in 5.5 years’ time. Calculate the price which should be paid for the bond if a net yield to maturity of 6.5% p.a. convertible half-yearly is required and tax on both interest and capital gains is at the rate of 25%.Question 6A bond with face value of $100 pays interest at j2 = 7% and is redeemable at par in 10 years’ time. The bond is purchased for $93.8. Calculate the net redemption payment allowing for capital gains tax at the rate of 25% if the bond is held to maturity.Question 7A bond was bought for $81 and sold for $97.2. The capital gains tax which will be payable is $3.7. Calculate the rate of capital gains tax (as a %, 2 decimal places).Question 8A bond with face value of $100 pays interest at j2 = 7.0% and is redeemable at par 7.5 years from now.Three years ago, Joanna purchased the bond for $94.2. Joanna pays tax on interest at the rate of 30% and tax on capital gains at the rate of 20%.Question 9Continuation of previous question.If Joanna sells the bond today for $91.6, use the APPROXIMATE formula (suitably adjusted to take account of taxation) to calculate the net yield, j2, earned by Joanna over the 3 years of her investment (as a %, 2 decimal places). Ignore taxation on the capital loss.Question 10A bond with face value of $100 has interest payments of $3.5 on 1 December 2012 and $4 each half-year thereafter. The bond matures at par on 1 December 2018. The bond is bought on 2 October 2012 at a price to give a gross yield to maturity of j2 = 6.1%.Calculate the price paid. Use the Reserve Bank method.Question 11In a government bond tender the coupon rate was j2 = 6.5% and the weighted average yield was j2 = 6%. At this yield the bonds were issuedSelect one:a. at a premium to the face value.b. at a discount to the face value. IncorrectQuestion 12A Treasury Bond isSelect one:a. Short-term equityb. Short-term debt Incorrectc. Long-term equityd. Long-term debtQuestion 13Look up the financial pages of a newspaper.Select one:a. The yield on Australian government Treasury Bonds is less than the yield on NSW Treasury Bonds.b. The yield on Australian government Treasury Bonds is greater than the yield on NSW Treasury Bonds. IncorrectQuestion 14A capital indexed bond with face value of $1,000 pays interest each quarter at 1% of the indexed capital value. The index increases by 0.45% compound at the end of each of the first 7 quarters and by 0.74% compound at the end of each of the next 3 quarters. Calculate the interest payment at the end of the 10th quarter.Question 15The successful bidders for Treasury bonds were:Bidder A for $140 million face value at a yield of 6.61% p.a.Bidder B for $50 million face value at a yield of 6.68% p.a.Bidder C for $210 million face value at a yield of 6.76% p.a.Calculate the weighted average yield (as a %, 2 decimal places) at which the Reserve Bank would be allocated bonds.