1. Elephant Tours has a bond outstanding with 5 years until maturity. The $1,000 par value bonds offer a coupon rate of 8%, and the current price is $950. What is the bond's yield to maturity?
2. Now assume that the Elephant Tours bonds can be called in 2 years' time with a premium of 4%. The coupon rate and current price remain the same as is #8. What is the bond's yield to maturity?
3. A zero coupon bond with a $1,000 par value has 8 years until maturity. Based on a 5% yield, what is the value of the zero coupon bonds?
4. You are offered $1,000 today, $10,000 in 12 years, or $20,000 in 25 years. Assuming you can earn 12% on your money, which should you choose? (Find the PV of each.)