Problem 16-1 Bond yields [LO2] The Pioneer Petroleum Corporation has a bond outstanding with an $85 annual interest payment, a market price of $800, and a maturity date in five years. Assume the par value of the bond is $1,000. Find the following: (Use the approximation formula to compute the approximate yield to maturity. Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Input variables: Annual interest Market price Maturity date Par value $85 $800 5 years $1,000 Solution and Explanation: a. Annual interest/ Par Value Coupon rate b. Annual interest/Market Price Current yield Annual Principal payment interest+ Price of the bond pproximate payrent + yield to Number of years to maturity 1. maturity (Y') 0.6 (Price of the bond) + 0.4 (Principal payment) c-1 Approximate yield to maturity