Reference no: EM131991167

Consider a corporate bond with the following characteristics: par value = $1000 coupon rate = 5% per year payment schedule = semiannual on June 15 and December 15 maturity date = December 15, 2030. 1. Draw a time line for this bond. Be sure that the time line shows the number of payments, the amount and timing of the coupon payments, and the amount and timing of the par value payment. 2. Assume a required rate of return of 3.8% per year. Given that required return and the payments from part 1, calculate the value of the bond. 3. Now, assume a required rate of return of 6% per year. Calculate the value of the bond. 4. Assume that the market price of this bond is $1250.00. Based on that market price, calculate the bond’s yield-to-maturity (expected rate of return). 5. Finally, assume that the market price of the bond is $872.00. Given that market price, what is the bond’s yield-to-maturity (expected rate of return).