Reference no: EM132537408

Question a. Several years ago , castles in the sand inc. issued bonds at face value of $1000 at a yield to maturity of 8% . Now , with 8 years 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 15% . What is the price of the bond ? ( Assume semiannual coupon payment ) ( Do not round intermediate calculations. Round your answer to 2 decimal places)

What is bond price?

Question b. Suppose that investors believe that castles can make good on the promise coupon payment but that the company will go bankrupt when the bond matures and the principal comes due. The expectation is that investors will receive only 80% of face value at maturity. If they buy the bond today , what yield to maturity do they expect to receive only 80% of face value at maturity.!If they buy the bond today . What yield to maturity do they expect to receive? ( Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places)