Question

Booker Petroleum Refiners (BPR) has an issue of 12-year, 10% annual coupon bonds outstanding. The bonds, which were originally issued 20 years ago, have a face value (FV) of $1,000, a yield-to-maturity (YTM) of 9%, and are noncallable. What is the current market price of BPR’s bonds?

$1,339.51

$1,178.77

$1,071.61

$910.87

Are the bonds of Booker Petroleum Refiners selling at a discount, at par, or at a premium?

Discount

Par

Premium

What is the current yield on Booker Petroleum Refiners’s outstanding bonds?

8.48%

9.33%

7.47%

10.98%

What is the expected one-year capital gain yield on the bonds of Booker Petroleum Refiners?

-0.27%

-0.30%

-0.33%

-0.39%

Answer 1

1.
=10%*1000/9%*(1-1/1.09^12)+1000/1.09^12=1071.60725276626

2.
Premium

3.
=10%*1000/1071.60725276626=9.332%

4.
=9%-9.332%=-0.332%