1. You are about to purchase a 20-year bond, ($1,000 face value) with 2% annual coupons. If the current market rate is 4%, at what price should you be willing to buy this bond, assuming that this bond pays interest on a semi-annual basis?
2. You are about to purchase a 15-year bond, ($1,000 face value) with 3 % annual coupon. If The current market rate is 4%, at what price should you be willing to buy this bond? Assuming that this bond pays interest on a semi-annual basis?