SELF TEST PROBLEM Q1 The Pennington Corporation issued a new series of bonds on January 1, 1978. The bonds were sold at par (Rs. 1,000), have a 12 percent coupon, and mature in 30 years, on December 31, 200?. Coupon payments are made semiannually (on June 30 and December 31). a} What was the YTM of Pennington's bond on January 1, 1978? b} What was the price of the bond on January 1, 1983, 5 years later, assuming that the level of interest rates had fallen to 10 percent? c) Find the current yield and capital gains yield on the bond on January 1, 1983, given the price as determined in part b. d) On July 1, 2001, Pennington's bonds sold for Rs. 916.42. What was the YTM at that date? e) What were the current yields and capital gains yield on July 1, 2001? PROBLEMS Q.2 Callaghan Motors' bonds have 10 years remaining to maturity. Interest is paid annually, the bonds have a Rs. 1,000 par value, and the coupon interest rate is 8 percent. The bonds have a yield to maturity of 9 percent. What is the current market price of these bonds