Currently the $11\%$ semi$-$annual bonds of Smith and Daughters have eight

years to maturity and are selling at $$85\mathrm{.}83($ $$858\mathrm{.}30$ per $$1,000$ of face value$).$

$($a$)$ Calculate the yield to maturity on the bonds.

$($b$)$ If interest rates do not change, at what price will the bonds sell two

years from today?

$($c$)$ Suppose interest rates do chango over the next two years. At the end of

two years, the bond is priced to yield $12\%.$ What will be the bond's

price on that day?

$($d$)$ Given the information in $($c$),$ what is the expected before$-$tax rate of

return if the bond is bought today and sold two years from today? State

clearly your reinvestment assumptions.

$($e$)$ If your marginal tax rate is $40\%,$ what is the expected after$-$tax rate of

return corresponding to part $($d$)?$