The yield-to-maturity on a bond is the interest rate you earn on your investment if interest rates do not change

Suppose the following bond quote for the Beta Company appears in the financial page of today's newspaper. Assume the bond has a face value of $1,000 and the current date is April 15, 2009. What is the yield to maturity on this bond?        A.  6.64 percent B.  8.96 percent C.  10.23 percent D.  12.47 percent E.  13.27 percent   This cannot be solved directly, so it's easiest to just use the calculator method to get an answer. You can then use the calculator answer as the rate in the formula just to verify that your answer is correct.

124.

You want to have $1.04 million in real dollars in an account when you retire in 38 years. The nominal return on your investment is 8 percent and the inflation rate is 3.5 percent. What is the real amount you must deposit each year to achieve your goal?    A.  $10,667.67 B.  $10,878.49 C.  $11,194.39 D.  $11,515.09 E.  $11,744.12 (1 + 0.08) = (1 + r) × (1 + 0.035); r = 4.347826 percent

125.

The yield-to-maturity on a bond is the interest rate you earn on your investment if interest rates do not change. If you actually sell the bond before it matures, your realized return is known as the holding period yield. Suppose that today, you buy a 12 percent annual coupon bond for $1,000. The bond has 13 years to maturity. Two years from now, the yield-to-maturity has declined to 11 percent and you decide to sell. What is your holding period yield?    A.  8.84 percent B.  9.49 percent C.  12.00 percent D.  13.01 percent E.  14.89 percent The yield-to-maturity at the time of purchase must be 12 percent, which is the coupon rate, because the bond was purchased at par value. Yield-to-maturity in 2 years = 12 percent - 1 percent = 11 percent   This cannot be solved directly, so it's easiest to just use the calculator method to get an answer. You can then use the calculator answer as the rate in the formula just to verify that your answer is correct.