Problem:
ABC issued new bonds on Jan., 1991. The bonds sold at par of $1,000, have a coupon of 12% and mature in 30 years. Interest is paid semi-annually on June 30 and Dec 31.
Required:
Question 1: What was the YTM on Jan.1, 1991?
Question 2: What was the price on Jan. 1, 1996, if interest rates had fallen to 10%?
Question 3: What is the current yield on the bond on Jan.1, 1996, given the previous price? On July 1, 2014, the bonds will sell for $916.42, what will be the ytm?
Note: Show supporting computations in good form.