1. Genome Ltd intends to issue 7-year bonds with semi-annual coupon payments. The market interest rate for such bonds is 8%. Coupon payments will be made at a rate of 9.0%. The management of Genome has determined that the company needs to raise

$875,000 to fund the purchase of a new office and will use the proceeds of the bond issue for that purpose.

1. Calculate the price of these 9.0% coupon bonds.
2. State and explain whether these bonds are premium or discount bonds.
3. How many of these 9.0% coupon bonds would the company issue?
4. Calculate the price of these bonds, if they paid no coupons to investors. Assume semi- annual compounding for these zero-coupon bonds.
5. How many of the zero-coupon bonds would the company need to issue?