Question1: An 8% semiannual coupon bond matures in five years. The bond has a face value of $1000 and current yields of 8021%. Calculate the bond's price and YTM?
Question2. Bond X is non callable, has 20 years to maturity, a 9 percent annual coupon, and a $1000 par value. Your required return on Bond X is 10 percent, and if you buy it you plan to hold it for 5years. You, and the market, have expectations that in 5years the yield to maturity on a 15-year bond with similar risk will be 8.5%.
How much should you be willing to pay for Bond X today? [Clue: You will need to know how much the bond will be worth at the end of five years].