6) First National Bank charges 8.5 percent compounded monthly on its business loans. First United Bank charges 8.6 percent compounded semiannually. As a potential borrower, you decide to compare their effective annual rates. Compute the effective annual rates for each bank. Which offers the lowest cost financing?

7) Moerdyk Corporation's bonds have a 15-year maturity, a 7.25% semiannual coupon, and a par value of $1,000. The going interest rate (rd) is 6.20%, based on semiannual compounding. What is the bond's price?

8) Somy Corp issues a 10 year bond with face value of 10,000 currently selling at 7,500 and a coupon rate of 6% paid on semi-annual basis. What is the yield on this investment? If market rate changes to 8% what is the impact on price? What is the price if market rate changes to 12%?

9) McCue Inc.'s bonds currently sell for $1,250. They pay a $90 annual coupon, have a 25-year maturity, and a $1,000 par value, but they can be called in 5 years at $1,050. Assume that no costs other than the call premium would be incurred to call and refund the bonds, and also assume that the yield curve is horizontal, with rates expected to remain at current levels on into the future. What is this bond's Yield to Maturity and its Yield to Call?

10) You are planning to save for retirement over the next 15 years. To do this, you will invest $1,000 a month in a stock account and $700 a month in a bond account. The return of the stock account is expected to be 12 percent, and the bond account will pay 7 percent. When you retire, you will combine your money into an account with a 9 percent return. Assuming a 20-year withdrawal period, how much you can withdraw each month from your account?