1. Par value of the bond is $1,000. Suppose you buy a 7% coupon, 20 year bond today when it's first issued. If interest rates suddenly rise to 15%, what happens to the value of your bond? Why? Ans1: 2. Par value of the bond is $1,000. Malahat Inc. has 7.5% coupon bonds on the market that have ten years left to maturity. The bonds make annual payments. If the YTM on these bonds is 8.75%, what is the current bond price? 3. Par value of the bond is $1,000. Happy valley Corporation has bonds on the market with 14.5 years to maturity, a YTM of 6.1% and curgent price of $1,038. The bonds make semiannual payments. What must the coupon rate be on these bonds? 4. What is the relationship between the price of a bond and its YTM? 5. Par value of the bond is $1,000. Colwood corporation has 8% coupon bonds making annual payments with a YTM of 7.2%, current market value of 1,059.6. How many years do these bonds have left until they mature? Focus 26