Priced at 921.89, 1,000 and 1,086.46 dollars as yields shift, a grower's eleven-year notes anchor these MT480 Unit 3 bond problems on price against required return. Searches like "mt 480 unit 3 assignment example", "mt480 unit 3 sample" and "mt480 unit 3 example" land here.
What a finished MT480 Unit 3 bond valuation problems looks like
Five problems in about four pages, each with a timeline of semiannual coupons. The grower's 5.40 percent notes have eleven years left and pay 27 dollars every six months. At a 5.40 percent required yield they sell at par; at 6.40 percent the price falls to 921.89, and at 4.40 percent it rises to 1,086.46, so a one-point move costs 78.11 dollars on the way up and gains 86.46 on the way down. A three-year 4.90 percent note moved by the same point changes by only 27.13 and 28.05. A quoted price of 96.35 implies a yield to maturity of 5.855 percent and a current yield of 5.605. An eight-year zero falls 7.45 percent when its yield rises from 6.1 to 7.1. The callable issue closes the set.
How a MT480 Unit 3 example is structured
Each problem uses one layout: the bond's terms, a timeline of coupons and principal, the price formula with its semiannual rate and period count, then the result and a sentence on what moved it. The first problem prices the long notes three times at yields a point apart, so the inverse relationship appears as three numbers rather than as a claim. The second repeats the exercise on the short note, and a paragraph explains why fewer remaining coupons mean less exposure. Problem three runs backward from a quoted price to a yield, solved by trial and confirmed with a RATE function. The zero-coupon problem isolates maturity with no coupons to cushion it. The last treats a premium bond callable in four years at 1,020 and asks which yield a buyer should actually expect to earn.
Three prices for one bond
The 5.40 percent notes are priced at par, 921.89 and 1,086.46, with the 22 remaining semiannual periods and each half-year rate written into the setup.
Short bonds move less
With six coupons left instead of twenty-two, the three-year note changes by 27 to 28 dollars per point, roughly a third of the long notes' swing.
From price back to yield
A price of 963.50 is solved for the rate that equates it with the cash flows, 5.855 percent, set beside a current yield of 5.605 that ignores the pull to par.
No coupons to cushion
An eight-year zero priced at 618.35 falls to 572.27 when its yield climbs one point, the steepest percentage drop anywhere in the set.
The yield a buyer can expect
Bought at 1,062.40, the premium issue yields 4.668 percent to maturity but only 4.155 to a call at 1,020 in four years, so the lower figure governs.
Where marks go in MT480 Unit 3
Pricing with annual coupons and eleven periods, where the notes pay semiannually over twenty-two, is the error graders spot fastest in this unit, since the price misses by a few dollars in a recognizable direction. Explanations of the inverse relationship that stop at saying rates went up earn less than those tying price to the fixed coupon, which a new buyer can beat elsewhere once yields rise. Reporting current yield as the yield to maturity costs marks on the discount note. Callable bonds valued only to maturity overstate what a buyer of the premium issue can expect, and the rubric often names yield to call explicitly. Interpretation sentences also score: every price should be read as the value to an investor requiring that return, the idea later units turn around into the firm's cost of debt.
Get a MT480 Unit 3 example written to your instructions
Which bonds did your Unit 3 problems describe? Send the terms and questions as written, the rubric, and whether your section expects a financial calculator, tables or a spreadsheet. The custom solutions price every bond from a coupon timeline and explain each move in yield. The first sample costs nothing and generally arrives in 24-48h.
MT480 Unit 3 questions, answered
Why does the long bond move more than the short one?
More of its value sits in cash flows far in the future, and discounting magnifies a rate change the further out a payment falls. The eleven-year notes carry twenty-two coupons and a distant principal, the three-year note only six coupons. The sample shows the effect numerically, 78.11 dollars against 27.13 for the same one-point rise, before it offers that explanation in words.
What is yield to worst?
The lowest yield an investor could earn among the possible outcomes, usually the yield to maturity or the yield to each call date. For a bond trading above its call price, the call is often the worse case, as with the sample's premium issue at 4.155 percent. For a bond below par, redemption at maturity usually gives the lower figure, so yield to maturity governs there.
Do I need to show the formula if I use a calculator?
Most rubrics reward a visible setup: coupon per period, number of periods, rate per period and face value, whatever tool produced the answer. The sample writes the formula once per problem with numbers substituted, then reports the result. That gives a grader something to follow if the final figure is off, which is where partial credit usually lives in problem sets.