1. Hacker Software has 9.4 percent coupon bonds on the market with nineteen years to maturity. The bonds make semiannual payments and currently sell for 107.5 percent of par. Calculate the following :-

a. What is the current yield on the bonds?

b. What is the YTM?

c. What is the effective annual yield?

2. The YTM on a bond is the interest rate you earn on your investment if interest rates dont change. If you actually sell the bond before it matures, your realized return is known as the holding-period yield (HPY). (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.)

a. Suppose that today you buy a 7 percent annual coupon bond for $1,160. The bond has 15 years to maturity. What rate of return do you expect to earn on your investment?

b-1. Two years from now, the YTM on your bond has declined by 1 percent, and you decide to sell. What price will your bond sell for?

b-2. What is the HPY on your investment?