As an investor, you are considering an investment in the obligations of the Conifer Coal Company. The obligations, which pay interest semiannually, will mature in eight years and have a coupon rate of 7.5% on a face value of $ 1,000. Currently, the bonds sell for $ 900.00 

a. If your required return is 9% for obligations in this risk class, what is the highest price you would be willing to pay? (Note: use the Pv function.)

b. What is the current performance of these obligations? If you hold the bonds for one year, what total rate of return will you earn? Why are these two different numbers?

c. What is the yield to maturity on these bonds if you buy them at the current price? (Note: use the Rate function.) d. If the obligations are redeemed in three years with a redemption premium of 4% of the face value, what is the yield to the redemption of these obligations? (Note: use the Rate function.) e. Now suppose the settlement date for your purchase will be 7/30/2009, the expiration date is 7/30/2017, and the date of the first redemption is 7/30/2012. Using the Price and Yield functions, recalculate your answers to parts a, c, and d.

F. If market interest rates remain unchanged, do you think the obligation is likely to be redeemed in three years? Why or why not?

g. Create a chart showing the relationship between the price of the obligation and its required return. Use a range of 0 to 15% to calculate prices