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Please use Excel One year ago, Speedway Promotions issued a $1000 face value bond with a coupon rate of 11 percent. At the time of

Please use Excel

One year ago, Speedway Promotions issued a $1000 face value bond with a coupon rate of 11 percent. At the time of the issue, the bonds maturity was 15 years. Coupon is paid semiannually.

a. If the market rate on similar risk bond is currently (for some recent years) 13 percent, for what price should you be able to buy the bond today?

b. Suppose an investor who bought the bond when it was issued last year sells the bond today. What is the current yield for her? What is capital gains yield? What is the rate of return on the bond?

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