Question
Help! I need help in solving the following two problems with explanations. Sample Test Problem 8.01 7 years ago Wildhorse Corporation issued 20-year bonds that
Help! I need help in solving the following two problems with explanations.
Sample Test Problem 8.01
7 years ago Wildhorse Corporation issued 20-year bonds that had a $1,000 face value, paid interest annually, and had a coupon rate of 8 percent. If the market rate of interest is 5.5 percent today, what is the current market price of an Wildhorse Corporation bond? (Round intermediate calculations to 5 decimal places, e.g. 1.25145 and final answer to 2 decimal places, e.g. 52.75.)
a. Current Market Price?
b. These bonds are selling at a discount or premium?
Problem 8.20
Sheridan, Inc., has four-year bonds outstanding that pay a coupon rate of 7.6 percent and make coupon payments semiannually. If these bonds are currently selling at $918.890.
What is the yield to maturity that an investor can expect to earn on these bonds? (Round answer to 1 decimal place, e.g. 15.2%.)
a. Yield to maturity (Round answer to 1 decimal place)
b. What is the effective annual yield? (Round answer to 1 decimal place, e.g. 15.2%.)
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