A firm's bonds have a maturity of 8 years with a $1,000 face value, have an 8% semiannual coupon, are callable in 4 years at $1,045.22, and currently sell at a price of $1,087.89. What are their nominal yield to maturity and their nominal yield to call? Do not round intermediate calculations. Round your answers to two decimal places.

YTM: %

YTC: %

What return should investors expect to earn on these bonds?

1. Investors would not expect the bonds to be called and to earn the YTM because the YTM is less than the YTC.
2. Investors would expect the bonds to be called and to earn the YTC because the YTC is less than the YTM.
3. Investors would expect the bonds to be called and to earn the YTC because the YTC is greater than the YTM.
4. Investors would not expect the bonds to be called and to earn the YTM because the YTM is greater than the YTC.

-Select-IIIIIIIVItem 3

Bond X is noncallable and has 20 years to maturity, an 8% annual coupon, and a $1,000 par value. Your required return on Bond X is 9%; if you buy it, you plan to hold it for 5 years. You (and the market) have expectations that in 5 years, the yield to maturity on a 15-year bond with similar risk will be 6.5%. How much should you be willing to pay for Bond X today? (Hint: You will need to know how much the bond will be worth at the end of 5 years.) Do not round intermediate calculations. Round your answer to the nearest cent.

$

Last year Janet purchased a $1,000 face value corporate bond with a 9% annual coupon rate and a 15-year maturity. At the time of the purchase, it had an expected yield to maturity of 11.74%. If Janet sold the bond today for $941.31, what rate of return would she have earned for the past year? Do not round intermediate calculations. Round your answer to two decimal places.

%