1c and 2 a and b

1. Four years ago, your firm issued $1,000 par, 25-year bonds, with a 7% coupon rate and a 10% call premium. a. If these bonds are now called, what is the approximate yield to call for the investors who originally purchased them? b. If these bonds are now called, what is the adual yield to call for the investors who originally purchased them at par? c. If the current interest rate is 5% and the bonds were not callable, at what price would each bond sell? 2. Assume that you purchased an 8%, 20-year, $1,000 par, semi-annual payment bond priced at $1,012.50 when it has 12 years remaining until maturity. Compute: a. Its promised yield to maturity. b. Its yield to call if the bond is callable in three years with an 8% premium. Activate Windows