1. solve:

a) Bonds issued by the Coleman Manufacturing Company have a par value of $1,000, which is also the amount of principal to be paid at maturity. The bonds are currently selling for $550. They have 10 years to maturity. Annual interest is 15 percent ($150), paid semiannually.

Compute the yield to maturity. (Do not round intermediate calculation. Use a Financial calculator to arrive at the answers. Round the final answer to 2 decimal places.)

Yield to maturity %

b) Ron Rhodes calls his broker to inquire about purchasing a bond of Golden Years Recreation Corporation. His broker quotes a price of $1,140. Ron is concerned that the bond might be overpriced based on the facts involved. The $1,000 par value bond pays 12 percent annual interest payable semiannually, and has 15 years remaining until maturity. The current yield to maturity on similar bonds is 10 percent.

Compute the new price of the bond. (Use a Financial calculator to arrive at the answers. Do not round intermediate calculations. Round the final answer to 2 decimal places.)

New price of the bond $

c) Lance Whittingham IV specializes in buying deep discount bonds. These represent bonds that are trading at well below par value. He has his eye on a bond issued by the Leisure Time Corporation. The $1,000 par value bond with semiannual payments has 8 percent annual interest and has 17 years remaining to maturity. The current yield to maturity on similar bonds is 14 percent. (Use a Financial calculator to arrive at the answers. Do not round intermediate calculations. Round the final answers to 2 decimal places.)

1. What is the current price of the bonds?

Current price $

2. By what percent will the price of the bonds increase between now and maturity?

Price increases by %

3. What is the annual compound rate of growth in the value of the bonds?

Annual compound rate %