11. MJI Corporation bonds mature in 6 years and have a yield to maturity of 8.5 percent. The par value of the bonds is $1,000. The bonds have a 10 percent coupon rate and pay interest on a semiannual basis. Assuming there are no changes to interest rates during the course of the year, what are the current yield and capital gains yield on the bonds for this year?

12. A bond that matures in 10 years sells for $925. The bond has a face value of $1,000 and an 8 percent annual coupon.

i. What is the bonds current yield?

ii. What is the bonds YTM?

iii. Assume the YTM remains the same for the next three years, what will be the price of the bond three years from today?

13. The following is the balance sheet for XYZ Corporations as at December 31, 2015.

Long-term debt (bonds, at par)	$10,000,000
Preferred stock	2,000,000
Common stock ($10 par)	4,000,000
Total Liabilities and Equity	$16,000,000

The bonds have a 4 percent coupon rate, payable semiannually, and a par value of $1,000. They mature in 10 years time. The yield to maturity is 12 percent, so the bonds now sell below par. Determine the current market value of the firms debt?

14. Match the following sentences to the most correct concept.

The process of accumulating interest in an investment over time to earn more interest is termed ______________. The present value of a future cash flow to determine its value today is known as the ________________________. The amount an investment is worth after one or more time periods is referred to as __________. Interest earned on the principal and may be for a number of years may be called ________________.