About buying bond that offers an annual coupon rate

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Reference no: EM131831257

1. You are thinking about buying a bond that offers an annual coupon rate of 6%, with exactly 8 years remaining to maturity. The face value of the bond is $1,000. Your required return is 5% per year. How much should you be willing to pay for this bond?

2. You observe a 15% annual coupon bond. The current price of the bond is $1,200 and it has a face value of $1,000. There are exactly 3 years remaining until the maturity of the bond. If you buy this bond now, what would be your YTM on it?

Reference no: EM131831257

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