1. Heather Smith is considering a bond investment in Locklear Airlines. The $1,000 par value bonds have a quoted annual interest rate of 8 percent and the interest is paid semiannually. The yield to maturity on the bonds is 12 percent annual interest. There are 10 years to maturity.

Compute the price of the bonds based on semiannual analysis

2. Bonds issued by the Coleman Manufacturing Company have a par value of $1,000, which of course is also the amount of principal to be paid at maturity. The bonds are currently selling for $580. They have 10 years remaining to maturity. The annual interest payment is 9 percent ($90). Compute the yield to maturity.