“The Pennington Corporation issued a new series of bonds on January 1, 1978. Thebonds were sold at par ($1,000), have a 12 percent coupon, and mature in 30 years, onDecember 31, 2007. Coupon payments are made semiannually (on June 30 and December31).a. What was the YTM of Pennington’s bonds on January 1, 1978?b. What was the price of the bond on January 1, 1983, 5 years later, assuming that thelevel of interest rates had fallen to 10 percent?c. What were the values of the current yield, capital gains yield, and total return on January 1, 1983, giventhe price as determined in part b.d. On July 1, 2001, Pennington’s bonds sold for $916.42.what were the values of the YTM, the current yield, the capital gains yield, and the total return at that time?”
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