a. KOP Companys bonds pay interest on January 15 and July 15, and they will mature on July 15, 2019. Their coupon rate is 17%. Because of the risk characteristics of KOP Company, you require a return of 21% annually on these bonds. How much should you pay for a $1,000 bond on January 16, 2015?

b. A bond has a face value of $1000 with a time to maturity 15 years from now. The yield to maturity of the bond now is 15%.

i. What is the price of the bond today, if it pays no coupons?

ii. What is the price of the bond if it pays annual coupons of 15%?

iii. What is the price today if pays 12% coupon rate semi-annually?

c. Differentiate between euro bonds and foreign bond with example.