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(5-2) Yield to Maturity for Annual Payments Wilson Wonders

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(5-2) Yield to Maturity for Annual Payments: Wilson Wonder’s bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 10%. The bonds sell at a price of $850. What is their yield to maturity?

(5-6) Maturity Risk Premium: The real risk-free rate is 3%, and inflation is expected to be 3% for the next 2 years. A 2- year Treasury security yields 6.3%. What is the maturity risk premium for the 2-year security?

(5-7) Bond Valuation with Semiannual Payment: Renfro Rentals has issued bonds that have a 10% coupon rate, payable semiannually. The bonds mature in 8 years, have a face value of $1,000, and a yield to maturity of 8.5%. What is the price of the bonds?

(5-13) Yield to Maturity and Current Yield: You just purchased a bond that matures in 5 years. The bond has a face value of $1,000 and has an 8% annual coupon. The bond has a current yield of 8.21%. What is the bond’s yield to maturity?