Bond 1: A Treasury bill is a type of pure discount bond with a 12-month maturity. It has 5 percent yield to maturity and issued today on January 1, 2020

Bond 2: A Treasury bond with a 15-year maturity that was issued 5 years ago (on January 1, 2015). It has a coupon rate of 10%. It pays semi-annual coupons and is now trading at $1.135.90.

Bond 3: A corporate bond with a AAA credit rating that was issued today, January 1, 2020, with a 20-year original maturity and a 9percentage coupon rate. It pays semi-annual coupon payments and has a 9 percent yield to maturity. The par value of all bonds is $1,000.

a) Calculate the price of Bond 1 today.

b) Calculate the yield to maturity on Bond 2 today. Please make only two iterations. Where you start and in which direction you move is important in this question.

c) State the price of Bond 3 today and state what kind of bond this is.

d) Assume 4.5 years passed, today is July 1, 2024, calculate the price of Bond 2 if yield to maturity in the market becomes 9%.

e) Assume one more year passed, today is July 1, 2025, calculate the price of Bond 3 if the yield to maturity becomes 10%.

f) Assume today is July 1, 2026, and yield to maturity for Bond 3 becomes 9% once again. Calculate the current yield and capital gains yield. Assume that you buy the Bond 3 on July 1, 2025 and sell it on July 1, 2026.

g) Today on January 1 ,2027, the credit rating agency changes the credit rating of Bond 3 from AAA to Baa. Briefly discuss what kind of effects it will have on Bond 3s yield to maturity and price