Question 1) A 9-year bond pays interest of $72 annually and sells for $940. What are its coupon rate, current yield and yield to maturity?
Question 2) One bond has a coupon rate of 9%, another a coupon rate of 11%. Both bonds have 10-year maturities and sell at a yield to maturity of 10%. If their yields to maturity next year are still 10%, what is the rate of return on each bond? Does the higher coupon bond give a higher rate of return?
Question 3) A company has issued 6% annual coupon bonds that are now selling at a yield to maturity of 7% and a current yield of 6.575%. What is the remaining maturity of these bonds?
Question 4) Do the following bond features favor the bondholder or the bond issuer? Explain.
a. Call provision
b. Conversion provision
c. Put provision