7-1 through 7-4

7-1 BOND VALUATION Madsen Motors's bonds have 23 years remaining to maturity. Interest is paid annually, they have a $1,000 par value, the coupon interest rate is 9%, and the yield to maturity is 11%. What is the bond's current market price? 7-2 YIELD TO MATURITY AND FUTURE PRICE A bond has a $1,000 par value, 12 years to matu- rity, and an 8% annual coupon and sells for $980. a. What is its yield to maturity (YTM)? b. Assume that the yield to maturity remains constant for the next three years. What will the price be 3 years from today? 7-3 BOND VALUATION Nesmith Corporation's outstanding bonds have a $1,000 par value, an 8% semiannual coupon, 14 years to maturity, and an 11% YTM. What is the bond's price? 7-4 YIELD TO MATURITY A firm's bonds have a maturity of 8 years with a $1,000 face value, have an 11% semiannual coupon, are callable in 4 years at $1,154, and currently sell at a price of $1,283.09. What are their nominal yield to maturity and their nominal yield to call? What return should investors expect to earn on these bonds