Air products and Chemicals sold $125 million of notes in Nov. of 2003 with a December 1. 2010, maturity date. The bonds were sold at a discount of $99.721 per $100 with a coupon rate of 4.125%. Answer the following:
a. Assume that bonds with a face value if $10,000 were purchased at the time of issue, semi-annual coupon payments, and that the bonds are kept until maturity. What is the yield to maturity for the investment?
b. Assume that it is known at time zero that the bonds could be sold for $10,350.50 after the second coupon payment in year 5. What is the yield until the time of the sale?
c. Consider the purchaser of the bond at the end of year 5 (for $10,350.50). If he or she retains the bond through its maturity, what is the yield?