A

1
2
3
4
5
6
7
8
9

10
11

Value
Yield to Maturity
Yield to Call
14 Current Yield
16
17

Mayes P 9-1
### Settlement Date
### Maturity Date
4.00% Call Date
7.50%
2
7
2
9.30%

$915.74
9.30%
12.75%
8.33%

12
13
15

Conifer Coal Company Bonds

Price
$
900.00
Face Value
$
1,000.00
Call Premium %
4.00%
Coupon Rate
7.50%
Frequency
2
Maturity (Years)
8
Years to first call
3
Required Return
9.00%

7/30/2007
7/30/2015
7/30/2010

$908.90 Value
Yield to Maturity
Yield to Call
Total Return

915.74
9.30%
12.75%
9.32%

Since the bond is selling at a discount (interest rates have

risen) the bond is unlikely to be called.

18
19

Yield/Price Data

21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37

Yield

Price
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
11.00%
12.00%
13.00%
14.00%
15.00%

$1,600.00
$1,498.55
$1,404.74
$1,317.95
$1,237.61
$1,163.19
$1,094.21
$1,030.24
$970.87
$915.74
$864.53
$816.91
$772.62
$731.39
$692.98
$657.19

Bond Price as Yields Change

Vertical Line
9.00%
0
9.00%
$915.74

$1,800.00
$1,600.00
$1,400.00
Price

20

Horizontal Line
0
$915.74
9.00%
$915.74

$1,200.00
$1,000.00
$800.00
$600.00
-0.01

0.01

0.03

0.05

0.07

Re quire d Re turn

0.09

0.11

0.13

0.15

Settlement Date
Maturity Date
Coupon Rate
Price
Face Value
Required Return
Frequency

Bond A
Bond B
3/15/2007
12/15/2007
4/15/2014
6/15/2025
5.00%
9.50%
$
890.00 $ 1,040.00
$ 1,000.00 $ 1,000.00
7.25%
8.75%
2
2
-31

Intrinsic Value
Under/Over Valued
Accrued Interest
Yield to Maturity
Duration

$
876.99 $ 1,066.56
Overvalued Undervalued
$
29.17 $
6.99%
9.04%
5.83
9.12

% Change in Price
Change in Yields
Bond A
Bond B
-2.00%
10.71%
23.07%
2.00%
-12.07%
-13.24%
If rates are going to fall, we would rather own Bond
B because it has a longer duration and will gain
more than Bond A. If rates are going to rise, we
would rather own Bond A because it has a shorter
duration and will lose less.

Issue Date
Maturity Date
Redemption Value
Auction Price

28-Day 91-Day 182-Day

5/18/2006 5/18/2006 5/18/2006
6/15/2006 8/17/2006 11/16/2006
100.00
100.00
100.00
99.64
98.80
97.56

Discount Rate
Book Formula
Disc Function

4.660%
4.660%

4.740%
4.740%

4.820%
4.820%

Bond Equivalent
Book Formula
YieldDisc Function

4.742%
4.742%

4.864%
4.864%

5.009%
5.009%

Corporate Bond Valuation

Settlement
5/23/2006
Maturity
10/1/2025
Coupon
7.000%
Face Value
100
Given Price
108.305
Given Yield
6.253%
Frequency
2
Calculated Price
Calculated Current Yield
Calculated Yield to Maturity
Duration
Modified Duration

108.307
6.463%
6.253%
11.12
10.78

Price Change
1%
-1%

$ (116.78)
$ 116.78

The bond chosen for this solution was the BellSouth

Telecommunications, Inc. 7.00's of 2025. The prices
and yields are as of 23 May 2006.

BellSouth
The prices

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