A 7-year bond of a firm in severe financial distress has a coupon rate of 14% and sells for $960. The firm is currently renegotiating the debt, and it appears that the lenders will allow the firm to reduce coupon payments on the bond to one-half the originally contracted amount. The firm can handle these lower payments. What are the stated and expected yields to maturity of the bonds? The bond makes its coupon payments annually. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Stated yield to maturity	%
Expected yield to maturity	%

A two-year bond with par value $1,000 making annual coupon payments of $108 is priced at $1,000.

a. What is the yield to maturity of the bond? (Round your answer to 1 decimal place.)

Yield to maturity %

b. What will be the realized compound yield to maturity if the one-year interest rate next year turns out to be (a) 8.8%, (b) 10.8%, (c) 12.8%?(Do not round intermediate calculations.Round your answers to 2 decimal places.)

Interest Rate		Realized YTM
8.8	%	%
10.8	%	%
12.8	%	%
Suppose that todays date is April 15. A bond with a 10% coupon paid semiannually every January 15 and July 15 is listed in The Wall Street Journal as selling at an ask price of 1,011.429. If you buy the bond from a dealer today, what price will you pay for it? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Invoice price $