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b. Massy Stores corporate bond cumently sells for $955, has a 12% coupon!nterest rate and a $1.000parvalue, pays interest annually, and has 15. years to
b. Massy Stores corporate bond cumently sells for $955, has a 12% coupon!nterest rate and a $1.000parvalue, pays interest annually, and has 15. years to maturity. Calculate the yield to maturity (YTM) on this bond. (2 marks) 1. ii. Explain the relationship that exists between () the coupon interest rate and yield to maturity and (2) the par value and market value of a bond. (3 marks) c. Your broker has shown you two bonds. Each has a maturity of 5 years, a par value of $1,000, and a yield to maturity of 12%. Bond A has a coupon interest rate of 6% paid annually Bond B has a coupon interest rate of 14% paid annually i. Calculate the selling price for each of the bonds. (3 marks) ii. Assume that you will reinvest the coupon payments as they are paid (at the end of each year) and that your rate of return on the reinvestment is only 10%. For each bond, calculate the value of the principal payment plus the value of the reinvestment account at the end of the 5 years
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