Showbiz, Inc., has issued eight-year bonds with a coupon rate of 6.395 percent and semiannual coupon payments. The market’s required rate of return on such bonds is 5.95 percent.
What is the market price of these bonds? (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and final answer to 2 decimal places, e.g. 15.25.)
Market price $___________ (i got $720.88)
If the above bond is callable after five years at an 8.5 percent premium on the face value, what is the expected return on this bond? (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and final answer to 2 decimal places, e.g. 15.25%.)
Expected return _______________