(a) Wojewodzki Corporation issued a 5-year bond at a coupon rate of 5%. The coupon is paid annually. The face value of the bond is $1,000. At the day of issuance, the bond was trading at yield to maturity of 8%. Calculate the price of this bond.

(b) Calculate this bonds current yield.

(c) Is this bond a discount or a premium bond? Shortly explain

(d) Calculate the price of the bond issued by Wojewodzki Corporation, if the coupons are paid semi-annually.

(e) Shortly explain why as interest rates increase, bonds prices fall and as interest rates fall, bonds prices increase?