Problem:
Assume that you are considering the purchase of an 11-year, non callable bond with an annual coupon rate of 8.60%. The bond has a face value of $1000, and it makes semiannual interest payments. If you require an 11.70% yield to maturity on this investment, what is the maximum price you should be willing to pay for the bond?
Explain comprehensively and provide step by step solution.