Bloomington Inc. issues a 20-year 6% annual coupon bond exactly a year prior to the due date of Problem
Set 2.
(a) Calculate the yield to maturity at the time of the issue if the bond is issued at a $82.60 discount.
(b) What would be the price on the problem set due date if the bond is priced to yield 9%?
(c) On September 27, 2015, you check the Wall Street Journal and find that comparable bonds are
yielding 5% annually. What is the price of the bond on September 27, 2015?
(d) You purchase the bond at the time of the issue (use the YTM from part (a)) and decide to sell it on
the problem set due date (use the 9% yield to maturity). What is your return on this bond trade
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