Three years ago, Jack's Automotive Jacks issued a 20-year callable bond with a $1,000 maturity value and an 8.5 percent coupon rate of interest. Interest is paid semiannually. The bond is currently selling for $1,046. (a) What is the bond's yield to maturity? (b) If the bond can be called in four years for a redemption price of $1,089, what is the bond's yield to call?

Many years ago, Topnotch Knives issued a zero-coupon bond with a $1,000 face value. The bond matures in three years. If the current market rate on similar bonds is 11 percent, (a) what is the bond's current value? Suppose the market rate stays at 11 percent for the next three years. What (b) current yield and (c) capital gains yield will bondholders receive each year during the remainder of the bond's life?

For the past 15 years, the P/E ratio of North/South Travel has been between 28 and 30. If North/South's earnings per share equal $4, in what price range would you estimate its stock should be selling?