1.A $1000 face-value coupon bond has a 10% coupon rate, a maturity of 4 years, and a price of $960.

a.Is the yield to maturity going to be above or below 10%, and why? (2.5 marks)

b.Calculate the present value of the bond when the interest rate is 12%. Must the yield to maturity be above or below 12%, and why? (2.5 marks)

c.Calculate the present value of the bond when the interest rate is 8%. Must the yield to maturity be above or below 8%, and why? (2.5 marks)

d.Calculate the yield to maturity for this bond at the current price. (2.5 marks)