An annual coupon bond issued by ABC Inc. 3 years ago has 2 years (i.e. 2 coupon payments) remaining till maturity (i.e. it was issued as a 5 year bond). The coupon rate is 8% and interest is paid once a year. If the price of the bond today is $980, the par value is $1,000 and the next interest payment is due one year from now, what is the YTM of the bond? A) 8.80% B) 10.5% C) 12.3% D) 9.14%
Please show steps especially in calculating the present/future value, thank you!