Question: A 20-year, 8% semiannual coupon bond with a par value of $1,000 may be called in 5 years at a call price of $1,040. The

A 20-year, 8% semiannual coupon bond with a par value of $1,000 may be called in 5 years at a call price of $1,040. The bond sells for $1,100. (Assume that the bond has just been issued.)

a. What is the bond's yield to maturity?

b. What is the bond's current yield?

c. What is the bond's capital gain or loss yield?

d. What is the bond's yield to call?

e. How would the price of the bond be affected by a change in the going market interest rate?

f. Now assume the date is October 25, 2017. Assume further that a 12%, 10-year bond was issued on July 1, 2017, pays interest semiannually (on January 1 and July 1), and sells for $1,100. Use your spreadsheet to find the bond's yield.

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