Kenko issues a $1,000 par value quarterly fixed coupon bond with a 6% coupon rate that will mature in 10 years.

analyze The Risk and Return, Valuation of Stock and Bonds

1. Calculate its yield to maturity, if the bond is sold for $960.

2. Suppose that the bond has a call feature with a $1,050 call price. Calculate the corporation calls the bond in year 5.

3. Suppose that the corporation offers you to exchange this bond with a 10 years zero coupon bond. What is the amount of par value required for a fair exchange? Will you accept this offer? Explain the reason!