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Last year Janet purchased a $1,000 face value corporate bond with a 10% annual coupon rate and a 10 -year maturity. At the time of the purchase, it had an expected yield to maturity of 11,17%. If Janet sold the bond today for $1,064,16, what rate of return would she have earned for the past year? Do not round intermediate calculations. Round your answer to two decimal places. % Kempton Enterprises has bends outstanding with a $1,000 face value and 10 years left until maturity. They have an 11% annual coupon payment, and heir current price is $1,175. The bonds may be called in 5 years at 109% of face value (Call price =$1,090). a. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. b. What is the yeld to call if they are called in 5 years? Do not round intermediate calculations. Alound your answer to two decimal places. c. Which yleid might investors expect to eam on these bonds? Why? 1. Irvestors would not expect the bonds to be called and to earn the VTM because the YTM is less than the VrC. II. Investors would expect the bonds to be called and to earn the rTC because the VTC is less than the YTM. III. Investors would expect the bonds to be called and to earn the Vric because the YrC is greater than the YTM. IV. Investors would not expect the bonds to be called and to earn the VTM because the YTM is greater than the YTC. 4. The bongs indenture indicates that the call provision gives the firm the right to call the bonds at the end of each year beginning in rear 5 . In Year 5 , the bonds may be called at 109% of face value, but in each of the next 4 vears, the call percentage will dedine by 1%. Thus, in Year 6 . they may be called at 108% of tace value; in Year 7 , they may be calied at 107% of face value; and so forth. If the yioid curve is horiacotal and interest rates remain at their current level, when is the latest that irvestors might expect the firm to cali the bonds? Do not round intermediate. calculations. In vear A 6% semiannual coupon bond matures in 5 years. The bond has a face value of $1,000 and a current yieid of 6.7572%. What are the bond's price and YTM? (Hint: Refer to Footnote 6 for the definition of the current yield and to Table 7.1) Do not round intermediate calculations, Round your answer for the bond's price to the nearest cent and for YTM to two decimal places. Bond's price: s is now January 1, 2021, and you are considering the purchase of an outstanding bond that was issued on January 1,2019.17 has a 7.5% annuat coupon and had a 30-year original maturity. (It matures on December 31, 2048.) There is 5 years of call protection (until December 31 , 2023), after which time it can be called at 108 -that is, at 108% of par, or $1,080. Interest rates have declined since it was issued, and it is now selling at 119.57% par, or $1,195.70. a. What is the yield to maturity? Do not round intermediate calculations. Round your answer to two decimal places. What is the yield to call? Do not round intermediate calculations. Round your answer to two decimat places. b. If you bought this bond, which return would you actually earn? 1. Investars would expect the bonds to be called and to earn the YTC because the rTC is greater than the Y TM. II. Investors would not expect the bonds to be called and to eam the YTM because the YTM is greater than the YTC. III. Investors would not expect the bonds to be called and to earn the YTM because the YTM is less than the YTC. IV. Investors would expect the bonds to be called and to earn the rrc because the YTC is less than the YrM. c Suppose the bond had been selling at a ciscount rather than a premium. Would the yield to maturity have been the most likely return, or would the vield to call have been most likely? 1. Investors would not expect the bonds to be called and to earn the YrM because the YTM is greater than the YTC. II. Investors would not expect the bonds to be called and to earn the YTM because the YTM is less than the YrC. III. Investors would expect the bonds to be called and to earn the YTC because the YTC is greater than the YTM. IV. Investors would expect the bonds to be called and to earn the YTC because the rTC is less than the YTM. Would an investor be more likely to earn the YTM or the YTC? b. What is the current yield? (Hint: Refer to Footnote 6 for the definition of the current yield and to Table 7.1 ) Round your answer to two decimal nlaces. Is this yield affected by whether the bond is likely to be called? 1. If the bond is called, the capital gains yield will remain the same but the current yield will be different. II. If the bond is called, the current yield and the capital gains vield will both be different. IIL. If the bond is called, the current yield and the capitat gains yield will remain the same but the coupon rate will be different. IV. If the bond is called, the current yield will remain the same but the capital gains yield will be different. V, If the bond is called, the current yield and the captal gains yield will remain the same. c. What is the expected capital gains (or loss) yield for the coming year? Use amounts calculated in above requirements for calculation, if recuired. Negative value should be indicated by a minus sign. Round your answer to two decimal places. Is this yield dependent on whether the bond is expected to be called? t. The expected capial gains (or loss) yield for the coming year does not depend on whether or not the bond is expected to be catied. II. If the bond is expected to be called, the appropriate expected total return is the rTM. IIt. If the bond is not expected to be called, the appropriate expected tetal retum is the YTC. IV. If the bond is expected to be called, the appropriate expected total return will not change. v. The expected capital gains (or loss) yieid for the coming year depends on whether or not the bond is expected to be called. Bond X is noncallable and has 20 years to maturity, a 9% annual coupon, and a $1,000 par value. Your required return on Bond X is 8%; if you buy ic, you plan to hold it for 5 years. You (and the market) have expectations that in 5 years, the vield to maturity on a 15 -year bond with similar risk will be 8.5\%. How much should you be willing to pay for Bond X today? (Hint: You will need to know how much the bond will be worth at the end of 5 years.) Do not round intermediate calculations. Round your answer to the nearest cent. 5