Question: 1. (Bond valuation) Nissan issued 20-year bonds with annual coupon rate 8 percent redeemed at par ($1,000). If the current market price of Nissan bonds is $945, what is the yield to maturity?
2. (Bond valuation) National Steel's 15-year, $1,000 par value bonds pay 5.5 percent interest annually. The market price of the bonds is $1,085, and your required rate of return is 7 percent.
a. Compute the bond's expected rate of return.
b. Determine the value of the bond to you given your required rate of return.
c. Should you purchase the bond.