a. You purchased a Johnson & Johnson bond two years ago for $980. The bond paid $100 per year in coupon interest on the last day of each year (the last payment made today). You intend to hold the bond for four more years and project that you will be able to sell it at the end of year 4 for $1,000. You also project that the bond will continue paying $100 in interest per year. Given the risk associated with the bond, its required rate of return (r) over the next four years is 3%. Calculate the current price of the bond. (20 marks)

b. What is the yield to maturity on a $1million T-Bill that currently sells at 99.55% of its face value and is 60 days from maturity?