The 6 percent coupon bonds of the target are selling at quoted price of 97.5. the bonds mature in eight years and pay interest annually.
(i) What is their current yield?
(ii) Calculate the yield to maturity.
(iii) Are there bonds a)premium bonds; b) par bonds; c) discount bonds; And how can you tell?
(iv) Calculate their effective annual yield.
(v) What if the bonds were semiannual bonds instead? Calculate their yield to maturity now.