Question #1

Sheridan Corp. has five-year semi-annual bonds outstanding that pay a coupon rate of 8.6 percent, these bonds are priced at $1,067.36

What is the yield to maturity on these bonds?

Yield to maturity

___% ?

Assume semiannual coupon payments. What is the effective annual yield?

Effective annual yield

____% ?

Question #2

Sunland Real Estate Company management is planning to fund a development project by issuing 10-year zero coupon bonds with a face value of $1,000. Assuming semiannual compounding, what will be the price of these bonds if the appropriate discount rate is 9.8 percent?

Price of the bond

$ ____ ?