Issuer Symbol Callable Coupon _rate Maturity Moody Rating Price Yield

MMM BRK3680632 Yes 7% 10/21/2030 Aa3 120 _____

a, The current market price of this bond is 120, meaning the bond is traded at 120%*1000=$1200 in the market. This annual bond pays annual coupon at coupon rate of 7%. The bond has 10 years left to maturity. Calculate the current yield of this bond? (hint: use current yield is like coupon yield)

1. 8.21%
2. 6.01%
3. 9.05%
4. 5.83%

b, One year ago, yield (to maturity) of bond was 4%. This annual bond pays annual coupon at coupon rate of 7%. The bond had 11 years left to maturity. Calculate the bond price at that time? (hint: use pv function)

1. $1156.31
2. $1481.17
3. $1262.81
4. $1104.13

c, You expect the bond yield will be 3% next year. This annual bond pays annual coupon at coupon rate of 7.35%. The bond had 9 years left to maturity. Calculate the bond price at that time? (hint: use pv function)

1. $1311.44
2. $1017.56
3. $1126.47
4. $1471.05