3. (10 points) Saint John Corporation has bonds on the market with 14.5 years remaining to maturity, an YTM of 6.8%, and a current price of $1,136.50. The face value is $1000.00. The bonds make semi-annual payments.

a. What must be the coupon rate on these bonds?

b. Use your answer at (a) to explain why this bond is a premium bond.

c. If you buy the bond today and hold it till maturity, how much capital gains income and how much dividend income will you earn?