An IBM bond carries a coupon rate of 6%, has a 4-year to maturity and sells at par.

(a)Display a timeline below that shows the cash flows of the bond.

(b)What will the bond's price be one year later when the yield to maturity has fallen by 1%?

(c)If you sold the bond at the price determined in (b) above what would your holding period return (HPR) be?

3.You are considering buying a bond that has a 10-year maturity and a 5% coupon rate.If the yield to maturity is 6%, will this bond sell at par, at a discount or at a premium?