The Pennington Corporation issued a new series of bonds on January 1, 1985. The

bonds sold at par value, this is $1,000. The bonds have a 12% percent coupon rate, and

mature on December 31, 2014 (30 years after issue). Coupon payments are due semiannually,

on June 30 and December 31 respectively.

a. What was the Yield to Maturity (YTM) of the Penningtons bonds on

January 1, 1985? Although you do not have to make any calculation to

answer this question, use the YTM Excel Function or the I.R.R. excel

function to demonstrate your answer.

b. What was the price of the bond on January 1, 1990, five years later,

assuming that the level of interest rates had fallen to 10%?

c. Find the current yield and capital gains yield on the bond on January 1,

1990, given the price as determined in part b.

d. On July 1, 2005, Penningtons bonds sold for $891.64. What was the

YTM at that date?

e. What were the current yield and capital gains yield on July 1, 2005?