27 5 pt ABC Inc has issued 25-year bonds that make semiannual coupon payments at a rate of 9.5 percent. The current market rate for similar securities is 11 percent. 1. What is the current market value of one of these bonds? 2. Would you purchase one of these bonds if it was offered to you at par value $1,000? Why? 3. What do you expect would happen to the bond's price if rates in the market (i) decrease percent or (ii) increase? 4. Suppose that you purchased the bond at the current market value from part 1, and you held it for 12 years. At that time, assume that you are able to sell the bond at $1,050, what would be your realized yield? 5. What is your Effective Annual Yield if you purchase the bond at the current market value and hold it to maturity? Explain your answer using the appropriate equations. Your explanation determines your grade. Show all your work and relevant equations 4. Suppose that you purchased the bond at the current market value at 11%, and you held it for 12 years. At that time, assume that you are able to sell the bond at $1,050, what would be your realized yield? 5. What is your Effective Annual Yield if you purchase the bond at the current market value and hold it to maturity? Previous 129 words