1. What is the market value of a 10-year maturity and $1,000 par value bond with a 9% coupon interest rate? Assume that the investor’s required rate of return from the bond is 13%. Assume that interest is paid semiannually.
$779.63
$908.08
$1,000
$1,105.84
2. A 10-year, 12% coupon, $1,000 par value bond is selling for $894.06 with a 14% annual yield. It can be called after 5 years at $1,120. What is the bond’s annual Yield-to-Call? Assume that the bond is paying semiannual interest.
18.66%
16.84%
11.2%
7.77%