A corporate bond maturing in 15 years with a coupon rate of 10.9 percent was purchased for $970 and it now selling for $1,000.

1. What is its current yield? Round your answer to one decimal place

2. What will be its selling price in two years if comparable market interest rates drop 4.9 percentage points? (Hint: Use Appendix A-2 and Appendix A-4 or the Garman/Forgue companion website.) Round Present Value of a Single Amount and Present Value of Series of Equal Amounts in intermediate calculations to four decimal places. Round your answer to the nearest cent. $

3. Calculate the bond's YTM using Equation 14.5 or the Garman/Forgue companion website. Round your answer to two decimal places. %

Appendix A-2 Present Value of a Single Amount (\$1) (Used to Compute the Discounted Present Value of Some Known Future Single Lump Sum) Present Value of a Series of Equal Amounts (an Annuity of $1 Received at the End of Each Period) YTM=(FV+CV)/2I+[(FVCV)/N] where I= Interest paid annually in dollars FV= Face value CV= current value (price) N= Number of years until maturity