Question

A. Several years ago, castles in the sand inc issued bonds at face value of $1000 at a yield to maturity of 6.6%.

Now with 8 year left until the maturity of the bonds, the company has run into hard times and the yield to maturity on the bonds has increased to 13%. What is the price of the bond now? (assume semiannual coupon payments) dont not round round intermediate calculations. Round answer 2 decimal places

B. Suppose that onvestors believe that Castles can make good on the promised coupon payments but the company will go bankrupt when the bond matures and the principal comes due. The expectation is that investors will receive only 86% of face value at maturity. If they buy the bond today. What yield to maturity do they expect to receive? dont not round round intermediate calculations. enter your answer as a percent rounded to 2 decimal places

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