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1 . You are considering to buy a 9 % semi - annual callable bond with 3 0 - year until maturity and Face Value

1. You are considering to buy a 9% semi-annual callable bond with 30-year until maturity and Face Value=$1000. The call date is in 6 years and the call price is $1020.(25 points)
a. Calculate the current yield if the price is 905.353555.(2 point)
b. Calculate the YTM(%) if bond price today is 905.35355.(5 points)
c. Calculate the yield-to-call (2 point)
d. Calculate the yield to worst (1 point)
e. You are planning to hold this bond for 3-years from today. Hence, your investment period is 3 years. Calculate the bond price 3 years from today when YTM=8%, which you will sell the bond at this price. (5 points)
f. What is future value of coupons at year 3 if you assume that the annual reinvestment rate=6%?(5 points)
g.What is the percentage total return? (1 points)
h.What is the total dollar return at h end of year 3?(1 point)
i. What is the interest on interest at the end of 3 years? (1 points)
j. What percentage of total dollar return is interest on interest? (1 point)
k. What percentage of total dollar return is capital gain? (1 point)
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