A bond issued by H&W Corporation has an annual-pay coupon of 5.625% plus a par value of $1,000 at maturity. This bond has a remaining maturity of 23 years. The required rate of return on securities of similar-risk grade is 6.76%.

1. What is the value of this corporate bond today?

2. What is the current yield for the H&W bond?

3. In the case of the H&W bond from question a, if the bond makes coupon payments semiannually, what would be the value of this security today?

4. How would the price of the H&W bond react to changing market interest rates? To find out, determine how the price of the issue reacts to changes in the bonds yield to maturity. Find the value of the security when the YTM is (1) 5.625%, (2) 8.0%, and (3) 4.5%. Label your findings as being a premium, par, or discount bond. Comment on your findings.

5. The Jay & Austin Company has a bond issue outstanding with the following characteristics: par of $1,000, a semiannual-pay coupon of 6.5%, remaining maturity of 22 years, and a current price of $878.74. What is the bonds YTM?