Problem:
Suppose that General Motors Acceptance Corporation issued a bond with 10 years until maturity, a face value of $1,000, and a coupon rate of 7.2% (annual payments). The yield to maturity on this bond when it was issued was 6.1%. Assuming the yield to maturity remains constant, what is the price of the bond immediately after it makes its first coupon payment?
After the first coupon payment, the price of the bond will be $___. (Round to the nearest cent.)
Assume the current Treasury yield curve shows that the spot rates for six months, one year, and one and a half years are 1%, 1.1%, and 1.3%, all quoted as semiannually compounded APRs. What is the price of a 1,000 par, 4% coupon bond maturing in one and a half years (the next coupon is exactly six months from now)?
The price of this bond is $____. (Round to the nearest cent.)