1. ABC Corporation issues a bond which has a coupon rate of 10.20%, a yield to maturity of 10.55%, a face value of $1,000, and a market price of $850. What is the annual interest payment?

Required to show the following 3 steps for this problem:

(i) Describe and interpret the assumptions related to the problem.

(ii) Apply the appropriate mathematical model to solve the problem. Describing the breakdown of what each variable does for the problem.

(iii) Calculate the correct solution to the problem.