Finance: Please answer all. Thank you very much!

1) Your company currently has 6% coupon-rate bonds (coupons are paid semi-annually) with ten years to maturity and a price of $1086. If you want to issue new 10-year coupon bonds at par, what coupon rate do you need to set? (Round to 2 decimal place. Assume that for both bonds, the next coupon payment is due in exactly 6 months.)

2. Suppose you purchase a 10-year bond with 6.7% annual coupons. You hold the bond for four years and sell it immediately after receiving the fourth coupon. If the bond's yield to maturity was 5.5% when you purchased and sold the bond,

2a. what cash flows will you pay and receive from your investment in the bond per $100 face value? The cash flows from the investment are shown in the following timeline. (Round to the best choice below.)

2b. what is the rate of return of your investment?

3. Consider the following bonds:

Bond	Coupon Rate (annual payments)	Maturity (years)
A	0.0%	15
B	0.0%	10
C	3.7%	15
D	8.5%	10

What is the percentage change in the price of each bond if its yield to maturity falls from 6.9% to 5.9%?

4. Suppose you purchase a 30-year zero-coupon bond with a yield to maturity of 5.9%. You hold the bond for five years before selling it.

4a. If the bond's yield to maturity is 5.9% when you sell it, what is the rate of return of your investment?

4b. If the bond's yield to maturity is 6.9% when you sell it, what is the rate of return of your investment?

4c. If the bond's yield to maturity is 4.9% when you sell it, what is the rate of return of your investment?

4d. Even if a bond has no chance of default, is your investment risk free if you plan to sell it before it matures? Explain.

5. HMK Enterprises would like to raise $10.0 million to invest in capital expenditures. The company plans to issue five-year bonds with a face value of $1,000 and a coupon rate of 6.55% (annual payments). The following table summarizes the yield to maturity for five-year (annual-payment) coupon corporate bonds of various ratings.

Rating	AAA	AA	A	BBB	BB
YTM	6.15%	6.31%	6.55%	6.92%	7.59%

5a. Assuming the bonds will be rated AA, what will the price of the bonds be?

5b. How much of the total principal amount of these bonds must HMK issue to raise $10.0 million today, assuming the bonds are AA rated? (Because HMK cannot issue a fraction of a bond, assume that all fractions are rounded to the nearest whole number.)

5c. What must be the rating of the bonds for them to sell at par?

5d. Suppose that when the bonds are issued, the price of each bond is $958.02. What is the likely rating of the bonds? Are they junk bonds?

A. Year B. Year Cash Flows 0 c. Year D. Year