A 20-year annual coupon bond pays 60 at the end of each year for the next 20 years and returns the par value of 1,000 at maturity. The time until default variable, T, has the exponential density 0.01e(0.01)t for 0 < t < infinity.

(b) Y is the random present value of the bond cashflow at a yield of j = 0.07. The price of the bond at a yield of 0.07 is the actuarial present value of the bond cashflow. What is the price of the bond?

(c) If the actuarial present value of the bond cashflow is 1,000, what rate j is used in discounting the bond cashflow?