Logistics Inc. issued Bond A and Bond B on October 1, 2011. Bond A is a $1 million par, 11% annual coupon bond and will mature on October 1, 2031. Bond B is a $1 million par, 12% annual coupon bond, and will mature on October 1, 2026.
(Each Part is Independent)
(a) If Bond A is issued at face value and both Bond B and Bond A are having the same yield to maturity, calculate the market price of Bond B on October 1, 2011.
(b) Justin purchased Bond B on October 1, 2017 when Bond B was priced to have a yield to maturity of 12%. Justin sold Bond B on October 1, 2018 when it was priced to have a yield to maturity of 10%. Calculate the current yield, capital gains yield and the 1-year rate of return on investment for Justin on October 1, 2018.
Please list the calculation steps