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What is the present value of bonds

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Two corporate bonds (from two different issuers) with notional $1000 and 3% and 7% coupon paid annually at year 1, 2, 3, 4 and 5, have 5 year remaining before they mature. The current risk free discount curve is 2% ?at, annual compounding.

(1) What is the present value of these bonds under the risk free discount curve?

(2) The 3% bond is traded at $817.94, the 7% bond is traded at $989.82, what are their internal yield of return (Y TM)?

(3) Can you speculate what happened to the two companies since they issued their bonds?

Reference no: EM133076301

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