1. A corporate bond with a face value of $1,000 in 4 years and has an 8% coupon paid at the end of each year. The current price of the bond is $975. Compute (a) the yield to maturity and (b) the realized yield if the coupons received can be reinvested at 9% pa.
2. Bond price: Knight, Inc., has issued a three-year bond that pays a coupon of 6.10 percent. Coupon payments are made semiannually. Given the market rate of interest of 5.80 percent, what is the market value of the bond?
3. What is the value of a bond that has an annual coupon of 12%, a maturity of 5 years and the market yield is currently at 8%?