Question: A bond issued by Google Corp. has a face value of $1000, matures in 4 years and has a 7 percent annual coupon. It currently

A bond issued by Google Corp. has a face value of $1000, matures in 4 years and has a 7 percent annual coupon. It currently sells at a yield to maturity of 8 percent. Calculate:

(a) Current yield.

(b) Realized compound yield for an investor holding the bond to maturity. The reinvestment rate in the first two years is 6 percent. In the last year the reinvestment rate equals to 7 percent.

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