QUESTION 3

Part A: Adams Enterprises bonds currently sell for $910. They have a 15-year maturity, an annual coupon of $85, and a par value of $1,000. What is their yield to maturity?

a. 7.34%

b. 9.66%

c. 8.60%

d. 9.95%

e. 11.21%

Part B: Moerdyk Corporation's bonds have a 15-year maturity, a 7.25% semiannual coupon, and a par value of $1,000. The going interest rate (rd) is 5.00%, based on semiannual compounding. What is the bonds price?

a. $1,235.47

b. $976.02

c. $1,457.85

d. $1,050.15

e. $1,359.01