1.Pybus, Inc. is considering issuing bonds that will mature in 22 years with an annual coupon rate of 9 percent. Their par value will be $1,000, and the interest will be paid semiannually. Pybus is hoping to get a AA rating on its bonds and, if it does, the yield to maturity on similar AA bonds is 10.5 percent. However, Pybus is not sure whether the new bonds will receive a AA rating. If they receive an A rating, the yield to maturity on similar A bonds is 11.5 percent. What will be the price of these bonds if they receive either an A or a AA rating?

The price of the Pybus bonds if they receive a AA rating will be $_______enter your response here. (Round to the nearest cent.)

2.Fingen's 13-year, $1,000 par value bonds pay 8 percent interest annually. The market price of the bonds is $880 and the market's required yield to maturity on a comparable-risk bond is

11 percent.

a.Compute the bond's yield to maturity.

b.Determine the value of the bond to you, given your required rate of return.

c.Should you purchase the bond?