Question 1
Consider some bonds with one annual coupon payment of 8.65%. The bonds have a par value of $1,000, a current price of $1,160, and they will mature in 17 years. What is the yield to maturity on these bonds?
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6.02%
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6.50%
◦
6.84%
◦
7.01%
Question 2
Cosmic Communications Inc. is planning two new issues of 20-year bonds. Bond Par will be sold at its $1,000 par value, and it will have a 12% semiannual coupon. Bond OID will be an original issue discount bond, and it will also have a 20-year maturity and a $1,000 par value, but its semiannual coupon will be only 7%. If both bonds are to provide investors with the same effective yield, how many of the OID bonds must Cosmic issue to raise $4,000,000? Disregard flotation costs, and round your final answer up to a whole number of bonds.
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6,105
◦
6,412
◦
6,680
◦
6,931
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