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Problem $12-08$

Bonds of Francesca Corporation with a par value of $$1,000$ sell for $$965,$ mature in five years, and have a $7$ percent annual coupon rate paid semiannually. Do not round intermediate calculations. Round your answers to two decimal places. Calculate:

Current yield.

Current yield:

$\%$ annually

Yield to maturity, to the nearest basis point $($i$.$e$.,$ x$.$xx percent$).$

YTM:

$\%$ annually

Horizon yield $($or realized return$)$ for an investor with a two$-$year holding period and a reinvestment rate of $6$ percent over the period. At the end of two years, the $7$ percent coupon bonds with three years remaining will sell to yield $7$ percent.

Horizon yield:

$\%$ annually