Bond with face value of 1000 EURO, 2 years time to maturity and 10 coupon rate, makes semiannual coupon payments and provides 8% yield-to-maturity.
a) Calculate the price of the bond.
b) If the yield-to-maturity would increase to 9%, what will be the price of the bond? How this change in the yield-to-maturity would influence bond price?