1. A bond issued by ABC Corp. has a face value of $1,000, coupon rate of 6%, price of $1,029.13 and time to maturity of one year. (PLEASE SHOW ALL WORK)

a. What is its current yield?

b. What is its yield to maturity?

c. Is this a discount, premium or par bond? Why?

d. Now suppose instead of having one year to maturity, it has two year to maturity and is priced $1,057.40. What is the current yield and the yield to maturity?

2. For each of the following bond features, state whether the feature will increase, decrease or have no effect on the price of the bond, all else being equal:

a. The bond is callable

b. The bond is convertible

c. The bond is puttable

d. 25-year bond has tax-exempt coupon payments