(NOTE: Must show work/calculator inputs for full credit)
What is the price of a 6% coupon bond maturing in 20 years if investors require a 7% return?
What is the price of the bond above if investors require a 5% return?
Suppose a 7% coupon bond maturing in 15 years is trading for 90 (90% of par). What is the yield to maturity on the bond?
Suppose the bond in question 3 is selling at par. What is the YTM? What is your effective annual return if you are able to reinvest the coupons at an annual rate of 4%?