Question: 1. (Bondholders' expected rate of return) You own a bond that has a par value of $1,000 and matures in 5 years. It pays a 5 percent annual coupon rate. The bond currently sells for $1,100. What is the bond's expected rate of return?
2. (Expected rate of return and current yield) Time Warner has bonds that are selling for $1,371. The coupon interest rate on the bonds is percent, and they mature in 21 years. What is the yield to maturity on the bonds? What is the current yield?