You are evaluating the purchase of three different bonds as described below, all of which have a par value of $1,000: -

A Walmart bond that has 10 years to maturity and has a coupon rate of 6% compounded annually. -

A Loblaws bond that has 20 years to maturity and pays an annual coupon of 8% per year. -

A Safeway bond that also has 20 years to maturity and has a coupon rate of 8%, with interest paid quarterly.

Walmart is an American company, and the market interest rate in the USA is currently 7% per year Loblaws and Safeway are Canadian companies, and the market interest rate in Canada, is currently 9% per year, compounded quarterly.

A. What are the prices today for EACH bond? Are each of these bonds selling at Premium or at a Discount? (6 Marks) B. For the Loblaws bond, what is the Current Yield interest yield), the Capital Gain Yield, and the Total Yield if someone today buys the bond at the price you found in part A and sells it exactly one year from today? For this question assume the market interest rate will stay at 9% per year, compounded quarterly, for the foreseeable future. (4 Marks)