) (Show all steps) A J&J Corp. bond carries a coupon rate of 12%, has 6 years until maturity, sells at a yield to maturity of 10 percent, face value of $1000 and annual interest payments.

a) If your required rate of return is 10% would you buy the above bond? Explain no explanations not credit.

b) Define Yield to Maturity.

c) What is the price of the bond? What is Current Yield (Coupon Yield) on the above bond?

d) If an investor bought the above bond at Face value what her/his rate of return will be? Explain.

e) In words give the reason and explain why the above bond is selling at premium. No explanations no credit.

f) If the coupon rate on the above bond is zero, can you calculate the price of the bond? If yes, what is the price of the bond?

g) If the yield to maturity increases to 14% in two years. If you decided to sell the bond in part c, what is your Capital Gain Yield? What is your Holding Period Yield? Show your work

h) What is the Holding Period Yield made out of?

i) Explain why Holding Period Yield is grater than or less than the original yield to maturity of 10 percent.