Question

# Please answer those three questions clearly At 5.5 percent bond matures in seven years, pays interest...

1. At 5.5 percent bond matures in seven years, pays interest semiannually and has a yield to maturity of 6.5 percent. What is the current market price of the bond?

1. \$945.08

2. \$947.21

3. \$944.47

4. \$962.40

Problem

5. (3 Points) Blue Water bonds have a face value of \$1,000, a coupon rate of 6.5 percent, semiannual interest payments, and mature in 11.5 years. What is the current price of these bonds if the yield to maturity (YTM) is 6.36 percent? PV = [(.065 × \$1,000) / 2]×{(1 - {1 / [1 + (.0636/ 2)]23}) / (.0636 / 2)} + \$1,000 / [1 + (.0636 /2)]23 = \$1,011.30

6. (2 Points) What is the current yield on the above bond?
7. Bonus (2 Points) An 8 percent, \$1,000 face value bond issued by Sweet Sue Foods has 16 years until maturity, pays interest semi-annually and the current yield to maturity is 6%. What is the current yield?

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