A 20-year, 8% semiannual coupon bond with a par value of $1,000 may be called in 5 years at a call price of $1,040. The bond sells for$1,100.

1. What is the bonds yield to maturity?

2. What is the bonds current yield?

3. What is the bonds capital gain or loss yield?

4.What is the bonds yield to call?

5. How would the price of the bond be affected by a change in the going market interest rate? (Hint: Conduct a sensitivity analysis of price to changes in the going market interest rate for the bond. Assume that the bond will be called if and only if the going rate of interest falls below the coupon rate. This is an oversimplification, but assume it for purposes of this problem.)

6. Now assume the date is October 25, 2017. Assume further that a 12%, 10-year bond was issued on July 1,2017,pays interest semiannually (on January 1 and July 1), and sells for $1,100. Find the bonds yield.