Question 3: Walker is a bond investor and currently, he holds 2 bonds in his portfolio. Bond A is a 3.75% coupon rate bond with 4 years remaining (until maturity) while bond B is a 6.25% coupon rate bond with 3 years remaining (until maturity). Currently, if Walker is not investing in bond A, he could have earned a 4% return by investing in bonds with similar risks to that of A. Meanwhile, Walker could have earned 3% by investing in bonds with similar risks to that of B. Walker wants to know whether his bonds are premium, par or discount bond. Without any calculation, please help Walker determining the type of bonds that he has and more importantly, explain to him HOW you arrive to your prediction in plain English.

Question 4: Atlanta Fisheries issues zero coupon bonds on the market at a price of $409.75 per bond. Each bond has a face value of $1,000 payable at maturity in 25 years. What is the yield to maturity for the bonds given a semi-annual compounding assumption?

Question 5: Atlanta Fisheries zero coupon bonds referred to above in question 4 are callable in 10 years at a call price of $500. Using semiannual compounding, what is the yield to call for these bonds?