Problem 13-05

Charlotte's Clothing issued a 6 percent bond with a maturity date of 16 years. Four years have passed and the bond is selling for $850. Assume that the bond pays interest annually.

1. What is the current yield? Round your answer to two decimal places.

   %

2. What is the yield to maturity? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest whole number.

   %

3. If five years later the yield to maturity is 8 percent, what will be the price of the bond? Use Appendix B and Appendix D to answer the question. Round your answer to the nearest dollar.

   $