Bond and Stock Problems

FIN 300 Bond and Stock problems 1. A City of Tempe muni bond has a yield of 3.4%. What is the tax equivalent yield for an investor in the 25% tax bracket compared to an investor in the 35% tax bracket? 2. What would you be willing to pay for a $1000 par, 6% coupon bond with 15 years until maturity if you wanted to earn a return of 7%? What if you only needed to earn a return of 5%? What if you wanted to earn 6%? 3. If you purchase a $1000 par value bond for $1025 that has a 7 5/8% coupon rate and 15 years until maturity, what will your annual return be? 4. Builtrite bonds have the following: 7½ % coupon, 14 years until maturity and are currently selling at $984. a) If you purchase the above bond, what would be your AYTM? b) If you want to make an 8% return, what would you be willing to pay? 5. Builtrite sold 15 year, zero coupon bonds yielding 5%. What did they sell for?