Use the following information for Question 7, 8, and 9.

The HUANG Company currently has one bond issue outstanding. This bond pays a coupon rate of 8% ($80 per year) and matures in six years, and has a par value of $1,000. If you require a 20% rate of return,

1. How much would you be willing to pay for each of HUANG Company's bonds? (Assuming this is an annual bond).

a. 600.94

b. 618.22

c. 634.19

2. What is the current yield (not yield) of this bond in the first year?

a. 13.088%

2. 13.174%
3. 13.313%
4. 13.667%

3. What is the capital gain yield of this bond in the first year?

a. 6.5148%

b. 6.6875%

c. 6.7729%