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A 5 year, $1000 face value bond makes annual payments and has a coupon rate of 8.5%. If the current yield on the bond is

A 5 year, $1000 face value bond makes annual payments and has a coupon rate of 8.5%. If the current yield on the bond is 9.5%, what is the bonds price? ANS: 894.74

Suppose that a year from now the bond sells at a yield to maturity of 9.5%. What is the price of the bond?

ANS: 967.96

What is your rate of return if you purchase the bond for $894.74, hold it for a year and then sell it for $967.96?

Please answer the third question

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