1. (20 points)(a) (4 points) Describe briefly in terms of future cash flows from a conventional bond: how the market price of a bond is determined by the prevailing yield to maturity (YTM); and how the YTM is determined by the market price of the bond.(b) (9 points) Explain why some bonds sell at a premium over par value, while other bonds sell at a discount. What do we know about the relationship between the coupon rate and YTM for premium bonds? For discount bonds? For bonds selling at par value?(c) (7 points) What is the relationship between the current yield and YTM for premium bonds? For discount bonds? For bonds selling at par?