What relationship between required return vs coupon interest

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A corporate bond with six years to maturity and a coupon rate of 8% has a par value of $1000. Interest is paid semi-annually on this bond.

Required:

Problem 1: If you require a return of 10 percent on this bond, what is the value of this bond to you?

Problem 2: What is the relationship between the required return and the coupon interest rate that will cause a bond to sell at a discount? At a premium? At its face value?

Problem 3: Explain what is meant by a bond's Yield to Maturity (YTM).

Problem 4: What is the approximate yield to maturity for a $1000 par value bond selling for $1100 pays interest annually and has 10 years to maturity? Assume a coupon rate of 10%.

Reference no: EM132993495

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