1 A bond with 10 years to maturity, a face value of $1,000 and a coupon rate of 10% is selling for $980. Assume the coupon is paid annually. a. What is its yield to maturity? b. Given this yield to maturity, draw the bond price in each year with price on y-axis and time (from t=0 to 20) on x-axis. Hint: Use excel function PV for price in each period. Also, PV gives the negative price, so take the absolute value as the price. At t=n, compute the price at 10-n years of maturity and YTM from (a). c. Now assume YTM=9.7%, repeat the exercise in (b) and explain how the graph is different from that in (b)