QUESTION 5

Part A: Brown Enterprises bonds currently sell at a 17.0% premium over par. They have a 5-year maturity, an annual coupon of $55 (paid once a year), and a par value of $1,000. What is their yield to maturity (round to one decimal place)?

a. 1.8%

b. 1.9%

c. 2.9%

d. 5.0%

e. 5.7%

Part B:

Brown Enterprises bonds currently sell at a 17.0% premium over par. They have a 5-year maturity, an annual coupon of $55 (paid once a year), and a par value of $1,000. What is the current yield of the bond (round to one decimal place)?

a. 4.3%

b. 4.7%

c. 5.3%

d. 7.1%

e. 8.2%