You are purchasing a bond that currently sold for $1,085.36. it has the time-to-maturity of 12 years

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Question:

You are purchasing a bond that currently sold for $1,085.36. it has the time-to-maturity of 12 years and a coupon rate of 7%, paid semi-annually. The bond can be called for $1,040 in 3 years. What is the yield to maturity of this bond? Round to the nearest hundredth percent. Do not include a percent sign in your answer. (i.e. If your answer is 4.32%, then type 4.32 without a % sign)

Yesterday, bonds for Risky Corp were traded for the yield-to-maturity of 6.44%, which were downgraded by S&P from BBB to BB today. If everything else is constant from yesterday (expected inflation rate etc.), the bonds' YTM should be:

a. lower than the coupon rate.

b. lower than the current yield.

c. higher than 6.44%.

d. the same as yesterday.

e. None of the above

Current interest rates are 8%. You want to buy a long-term bond with a face value of $1000 that pays a coupon rate of 10%. Which of the following prices is feasible?

a. $888.88

b. $1,000.00

c. $1,111.11

d. Not enough information to answer.

e. None of the above is feasible.