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a. A $5,800 par bond with an annual coupon has only one year until maturity. Its current yield is 8.52%, and its yield to maturity
a. A $5,800 par bond with an annual coupon has only one year until maturity. Its current yield is 8.52%, and its yield to maturity is 14%. What is the price of the bond? b. A one-year premium bond with a face value of $20,000 has been purchased for $24,150. What is the yield to maturity? What is the yield on a discount basis? (See Chapters 3 and 12.) c. Star bucks Corp. has a convertible bond with face value of $3,000, a coupon rate of 8%, and annual payments for 5 years. The bond can be converted into 25 shares of common equity (currently trading at $45 per share). What will be the best option for the investor-to convert the bonds or to sell them? The market rate is 10%. Show ALL workings
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