Problem:
A $1,000 face value bond of Acme Inc. pays an annual coupon and carries a coupon rate of 5.5%. It is was a 30 year bond when issued and it has 13 years remaining to maturity. If it currently has a yield to maturity of 6.25%.
Required:
Question 1: What interest payments do bondholders receive each year?
Question 2: What is the current bond price?
Question 3: What is the bond price if the yield to maturity rises to 7%?
Note: Explain all steps comprehensively.