B 1.000 6.50% 32.50 10.00 20 8% 4% $898.07 1 Future Value 2 Coupon Rate 3 Semiannual Coupon Payment 4 Years to Maturity 5 N 6 Market Rate 71 8 9 A) Fair Bond Value 10 11 12 B) Current Yield 13 14 C) Total Return 15 Bond Value in one Year 16 17 Capital Gains/Loss Yield (one year period) 18 Current Yield (from b) 19 Total Return 20 7.24% $905.06 0.78% 7.24% 8.02% B A 21 D) YTM 8.00% 22 3 23 24 25 Future Value (includes call premium) 26 Semiannual Coupon Payment 27 Years to call 28 N 29 Bond Value (at time of purchase see a)) 30 31 E) YTC 32 33 34 F) If the market interest rates remain unchanged, do you think it is likely that the bond 35 will be called in three years? Why or why not? 36 37 38 39 40 11 B 1.000 6.50% 32.50 10.00 20 8% 4% $898.07 1 Future Value 2 Coupon Rate 3 Semiannual Coupon Payment 4 Years to Maturity 5 N 6 Market Rate 71 8 9 A) Fair Bond Value 10 11 12 B) Current Yield 13 14 C) Total Return 15 Bond Value in one Year 16 17 Capital Gains/Loss Yield (one year period) 18 Current Yield (from b) 19 Total Return 20 7.24% $905.06 0.78% 7.24% 8.02% B A 21 D) YTM 8.00% 22 3 23 24 25 Future Value (includes call premium) 26 Semiannual Coupon Payment 27 Years to call 28 N 29 Bond Value (at time of purchase see a)) 30 31 E) YTC 32 33 34 F) If the market interest rates remain unchanged, do you think it is likely that the bond 35 will be called in three years? Why or why not? 36 37 38 39 40 11