Evaluate the following bonds:

a. An 8 %, 25-year, $1,000 bond is presently selling at a yield-to-maturity (YTM) of 9 %. Assuming annual interest payments, what should you pay for the bond?

b. What should you pay if interest is paid semiannually?

c. Instead of a 25-year bond, they decide to issue 15-year bonds with annual payments. What should you pay for this bond if the YTM is 9 %? Explain the differences in prices changes for (3a) and (3c) in terms of maturity.

d. You buy an 8%, 15-year, $1,000 bond that pays interest annually when it is selling with a YTM of 7%. Immediately after you buy the bond, the YTM increases to 9%. What was the percentage change in the price of the bond?

e. A bond has a market price that exceeds its face value. What type of bond is this? Describe the relationship between the coupon rate and the YTM.