A 2.50 percent coupon municipal bond has 12 years left to maturity and has a price quote of 98.45. The bond can be called in four years. The call premium is one year of coupon payments. (Assume interest payments are semiannual and a par value of $5,000.) 1). Compute the bond's current yield. (Do not round intermediate calculations. Round your answer to 2 decimal places.) 2). Compute the yield to maturity. (Do not round intermediate calculations. Round your answer to 2 decimal places.) 3). Compute the taxable equivalent yield (for an investor in the 35 percent marginal tax bracket). (Do not round intermediate calculations. Round your answer to 2 decimal places.) 4). Compute the yield to call. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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Bond Valuation

Bond valuation are the notes issued by the corporation to raise long-term funds for the business. The corporations are required to pay the interest on such liabilities at a specified rate of interest (termed as coupon rate) at specified dates which may be on semi-annual or annual basis. These interest payments may be in the form of coupons.