1. ABC has $1,000 face value bonds outstanding. These bonds pay interest semi-annually, mature in 10 years, and have a 7.5 percent coupon. The current price is quoted at 99.59 percent of par value. What is the yield to maturity? What is the current yield?
2. Refer to 1 above. Suppose the bonds are callable in 5 years at 105 percent of par value, what is the yield-to-call?
3. ABC's bonds have a 9.5 percent coupon and pay interest semi-annually. Currently, the bonds are quoted at 106.315 percent of par value. The bonds mature in 12 years. What is the yield to maturity? What is the current yield?
4. Refer to 1 above. Suppose the bonds are callable in 5 years at 110 percent of par value, what is the yield-to-call?
5. When is a company likely to make a call - when the interest rates go up or go down? why?
6. What is a sinking fund provision?