3. John is a recent retiree who is interested in investing some of his savings in corporate bonds. His financial planner has suggested the following bonds:

Bond A has 7% annual coupon

Bond K has a 6% annual coupon

Bond Z has an 9% annual coupon.

All bonds have 8 years to maturity and par-value of $1,000. Each bond currently has a nominal interest rate of 7%

a. Before calculating the prices of the bonds, indicate whether each bond is trading at par, premium, or discount.

b. Calculate the current price of each of the three bonds.

c. If the nominal interest rate for each bond remains at 7%, what will be the price of each bond 2 years from now?