1) A bond with a face value of $1,000 has 14 years until maturity, carries a coupon rate of 7.6%, and sells for $1,089.
a. What is the current yield on the bond? (Enter your answer as a percent rounded to 2 decimal places.)
b. What is the yield to maturity if interest is paid once a year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 4 decimal places.)
c. What is the yield to maturity if interest is paid semiannually? (Do not round intermediate calculations. Enter your answer as a percent rounded to 4 decimal places.)
2) Maxcorp's bonds sell for $1,223.64. The bond life is 9 years, and the yield to maturity is 8.8%. What is the coupon rate on the bonds? (Assume a face value of $1,000 and annual coupon payments.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)
3) You buy a bond for $976 that has a coupon rate of 7.4% and a 5-year maturity. A year later, the bond price is $1,136. (Assume a face value of $1,000 and annual coupon payments.)
a. What is the new yield to maturity on the bond? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
b. What is your rate of return over the year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
4) You buy a bond for $967 that has a coupon rate of 6.8% and a 8-year maturity. A year later, the bond price is $1,112. (Assume a face value of $1,000 and annual coupon payments.)
a. What is the new yield to maturity on the bond? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
b. What is your rate of return over the year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)