On January 1, 2013, you bought a 25-year bond of James Corporation - James Bond 007-2013.

The Yield to Maturity at the time of purchase was 6.0%. The bond had a face value of $1,000 and an 8% quarterly coupon.

On July 1, 2018, James Corporation declared bankruptcy, and as part of the bankruptcy arrangement, the bond was renegotiated as follows.

• Beginning July 1, 2018, no interest will be paid for the next 6 years. James did pay coupon interest due June 30, 2018
• Afterward, interest will be paid at 30% of the original coupon interest for the next 4 years.
• Afterward, the original interest will be paid for the remainder of the term.
• Face Value will remain at $1,000.

Determine the following.

1. Assuming you still own that bond until maturity what would be the true yield earned by you for the bond that you purchased on 1/1/2013.

2. On the day of bankruptcy declaration, the yield on the bond is 16%, reflective of the added risk. What was the bond trading on 7/1/2018?

3. Assuming you sold the bond on 7/1/2018 for that market price (ignore commission) what would be your Holding Period Yield (HPY)?