1. Madsen Motors’s bonds have 24 years remaining to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 9%; and the yield to maturity is 8%. What is the bond’s current market price? Round your answer to the nearest cent.

2. Pelzer Printing Inc. has bonds outstanding with 9 years left to maturity. The bonds have a 9% annual coupon rate and were issued 1 year ago at their par value of $1,000. However, due to changes in interest rates, the bond’s market price has fallen to $905.35. The capital gains yield last year was -9.465%.

- What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places.
- For the coming year, what is the expected current yield? (Hint: Refer to footnote 7 for the definition of the current yield and to Table 7.1.) Do not round intermediate calculations. Round your answer to two decimal places.

For the coming year, what is the expected capital gains yield? (Hint: Refer to footnote 7 for the definition of the current yield and to Table 7.1.) Do not round intermediate calculations. Round your answer to two decimal places. - Bond X is noncallable and has 20 years to maturity, a 8% annual coupon, and a $1,000 par value. Your required return on Bond X is 11%; if you buy it, you plan to hold it for 5 years. You (and the market) have expectations that in 5 years, the yield to maturity on a 15-year bond with similar risk will be 7%. How much should you be willing to pay for Bond X today? (Hint: You will need to know how much the bond will be worth at the end of 5 years.) Do not round intermediate calculations. Round your answer to the nearest cent
- Last year Janet purchased a $1,000 face value corporate bond with an 10% annual coupon rate and a 15-year maturity. At the time of the purchase, it had an expected yield to maturity of 11.52%. If Janet sold the bond today for $1,166.98, what rate of return would she have earned for the past year? Do not round intermediate calculations. Round your answer to two decimal places.
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