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i. Your company currently has $1,000 par, 6.5 % coupon bonds with 10 years to maturity and a price of $1,082. If you want to issue new10-year coupon bonds atpar, what coupon rate do you need toset? Assume that for bothbonds, the next coupon payment is due in exactly six months.

ii. Suppose aten-year, $1,000 bond with an 8.9 % coupon rate and semiannual coupons is trading for $1,034.09.

a. What is thebond's yield to maturity(expressed as an APR with semiannualcompounding)?

b. If thebond's yield to maturity changes to 9.5% APR, what will be thebond's price?