Question 1. Callaghan Motor's bonds have 10 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 8 percent; and the yield to maturity is 9 percent. What is the bond's current market price?
Question 2. A bond has a 1,000 par value, 10 years to maturity, a 7 percent annual coupon, and sells for $985.
What is its current yield? What is its yield to maturity? Assume that the yield to maturity remains constant for the next 3 years. What will the price be 3 years from today?
Question 3. A firm's bond's have a maturity of 10 years with a $1,000 face value, an 8 percent semiannual coupon, are callable in 5 years at $1,050, and currently sell at a price of $1,100. What are their yield to maturity and their yield to call? What return should investors expect to earn on this bond?