Chapter 6 Valuing Bonds

A bond has a coupon rate of 7% and has 5 years until maturity. If the current yield to maturity is 5%, what is the price of the bond? What is the amount of the annual interest payment paid to the bondholder?

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An investor buys a 10-year, 7% coupon bond for $990, holds it for 1 year, and then sells the bond for $980. What was the investor's rate of return?

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What is the price of a zero coupon bond with a 20 year maturity and a yield to maturity of 6% and a par value of $100,000?

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