1. Consider the case of Badger Corp.:

Badger Corp. has 9% annual coupon bonds that are callable and have 18 years left until maturity. The bonds have a par value of $1,000, and their current market price is $1,070.35. However, Badger Corp. may call the bonds in eight years at a call price of $1,060. What are the YTM and the yield to call (YTC) on Badger Corp.s bonds?

2. If interest rates are expected to remain constant, what is the best estimate of the remaining life left for Badger Corp.s bonds?

5 years

8 years

18 years

13 years

3. If Badger Corp. issued new bonds today, what coupon rate must the bonds have to be issued at par?

4. Assume that a $1,000,000 par value, semiannual coupon US Treasury note with four years to maturity has a coupon rate of 3%. The yield to maturity (YTM) of the bond is 11.00%. Using this information and ignoring the other costs involved, calculate the value of the Treasury note.

5. Based on your calculations and understanding of semiannual coupon bonds, complete the following statement:

The T-note described in this problem is selling at a _