13. 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 semi-annual 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?

14. PP Inc. has outstanding bonds with an annual 8% coupon. The bonds have a par value of $1000 and a price of $865. The bond will mature in 11 years. What is the yield to maturity on the bonds?

15. Bond Relationships. Select one or more of the following phrases to complete the following sentences. increase , decrease, par, discount, premium, less than, more than, greater , less

a. If the current interest rate exceeds the bonds coupon rate, the bond will sell at a ___________.

b. The value of a bond to increase if there is a/an ________ in interest rates.

c. A bonds coupon rate is more than the interest rate, therefore the bond is selling at a _____________.

d. As interest rate increases the value of a bond will ______________.

e. If the bondholders required rate of return equals the coupon interest rate, the bond will sell at _________.

f. A premium bond sells for ____________ as maturity approaches.

g. The discount bond sells for ____________ as maturity approaches.

h. A bondholder with a short-term bond is exposed to ___________ interest rate risk than when owing a long-term bond.