Hi,

Please assist with these 2 problems:

1)

A(n) 8.0%, 25-year bond has a par value of$1,000 and a call price of $1,150. (The bond's first call date is in 5years.) Coupon payments are made semiannually(so use semiannual compounding whereappropriate).

a. Find the currentyield, YTM, and YTC on thisissue, given that it is currently being priced in the market at $1,275. Which of these 3 yields is thehighest? Which is thelowest? Which yield would you use to value thisbond? Explain.

b. Repeat the 3 calculationsabove, given that the bond is being priced at $925. Now which yield is thehighest? Which is thelowest? Which yield would you use to value thisbond? Explain.

a. If the bond is priced at $1,275, the current yield is __%. (Round to two decimalplaces.)

The annualyield-to-maturity with semiannual compounding is

__%. (Round to two decimalplaces.)

The annualyield-to-call with semiannual compounding is

__% (Round to two decimalplaces.)

Which of these 3 yields is thehighest? Which is thelowest?

Which yield would you use to value thisbond?(Select the best answerbelow.)

A.

Theyield-to-maturity is always used.

B.

Theyield-to-call because convention is to use the lower more conservative measure of yield.

C.

Itdoesn't matter which yield you use.

D.

Theyield-to-maturity because the bonds may not be called.

b. If the bond is priced at $925, the current yield is

nothing

%. (Round to two decimalplaces.)

The annualyield-to-maturity with semiannual compounding is

nothing

%. (Round to two decimalplaces.)

The annualyield-to-call with semiannual compounding is

nothing

%. (Round to two decimalplaces.)

Which of these 3 yields is thehighest? Which is thelowest?

Which yield would you use to value thisbond?(Select the best answerbelow.)

A.

Theyield-to-maturity because convention is to use the lower ofyield-to-maturity oryield-to-call for bonds selling at a discount.

B.

Itdoesn't matter which yield you use.

C.

Theyield-to-maturity because the bonds may not be called.

D.

Theyield-to-maturity is always used.

2)

A certain 6% annual coupon rate convertible bond(maturing in 20years) is convertible at theholder's option into 20 shares of common stock. The bond is currently trading at $800. The stock(which pays 77 a share in annualdividends) is currently priced in the market at $30.99 a share.

a. What is thebond's conversionprice?

b. What is its conversionratio?

c. What is the conversion value of thisissue? What is its conversionparity?

d. What is the conversionpremium, in dollars and as apercentage?

e. What is thebond's paybackperiod?

f. If comparablyrated, nonconvertible bonds sell to yield 8%, what is the investment value of theconvertible?

a. Thebond's conversion price is $

nothing __(Round to the nearestcent.)

b. The conversion ratio is

__shares.(Round to the nearestinteger.)

c. The conversion value of this issue is $

__(Round to the nearestcent.)

The conversion parity of this issue is $

__(Round to the nearestcent.)

d. The conversion premium in dollars is $

__(Round to the nearestcent.)

The conversion premium as a percentage is

__%. (Round to two decimalplaces.)

e. Thebond's payback period is

__(Round to one decimalplace.)

f. The investment value of the convertible is $

__(Round to the nearestcent.)