1.The Lone Star Company has $1,000 par value bonds outstanding at 9 percent interest. The bonds will mature in 15 years. Use Appendix B and Appendix D for an approximate answer but calculate your final answer using the formula and financial calculator methods. Compute the current price of the bonds if the present yield to maturity is. (Do not round intermediate calculations. Round your final answers to 2 decimal places. Assume interest payments are annual.)

		Bond Price
a.	7 percent
b.	8 percent
c.	12 percent

2.

Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 16 percent to 12 percent.

Bond price

a. What is the bond price at 16 percent?

b. What is the bond price at 12 percent?

Bond price

c. What would be your percentage return on investment if you bought when rates were 16 percent and sold when rates were 12 percent? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Return on investment

%