Question 1: A $190,000 issue of six-year bonds offers 9.95% coupons payable semi-annually. What is the premium or discount and the purchase price of the bonds if the bonds are priced to yield 8.2%.

Question 2: The City of Surrey financed the acquisition of a building site though a $10 million long-term bond issue due in exactly fifteen years. The bonds coupon rate is 11.25%, paid semi-annually. To plan for the redemption value of the bonds, the city agreed to make equal payments at the end of every six months into a sinking fund paying 5.75% compounded semi-annually.

a) What is the bonds coupon payment every six months?

b) What is the size of the semi-annual payments into the sinking fund?