1.Zang international Chinese chemical company has a 15% annual coupon interest rate on a $1,000 par value bond with 20 years left to maturity.Bonds of same maturity now sell to yield 11% return.

1a. How much would you be willing to pay for one of these bonds today?Why?

1b. If the bond is selling for $ 1,141 what is the yield to maturity?

1c. Explain why some bonds sell at a premium over par value while other bonds sell at a discount. What do you know about the relationship between the coupon rate and the YTM for premium bonds?What about for discount bonds? For bonds selling at par value?