Problem:
Flagship Corp is looking to raise capital by issuing some 26 year bonds. The yield on the bonds is 7.34 percent. The bonds sell 96.75 percent of par value.
Required:
Question 1: What is the current yield on these bonds?
Question 2: What is the effective yield on the bonds?
Question 3: What is the yield to maturity? what type of bond is this, discount or premium?
Note: Provide support for your underlying principle.