1.What is the price of a three-year, default-free security with a face value of $1000 and an annual coupon rate of 4%? What is the yield to maturity for this bond?
2.What is the maturity of a default-free security with annual coupon payments and a yield to maturity of 4%? Why?
3.Consider a four-year, default-free security with annual coupon payments and a face value of $1000 that is issued at par. What is the coupon rate of this bond?
4.Consider a five-year, default-free bond with annual coupons of 5% and a face value of $1000.
a. Without doing any calculations, determine whether this bond is trading at a premium or at a discount. Explain.
b. What is the yield to maturity on this bond?
c. If the yield to maturity on this bond increased to 5.2%, what would the new price be?