Linnell Corp. has a $1,000 par value bond with an 7% coupon rate (paid semiannually) and a ten year maturity. Lets assume that the market believes the Yield to Maturity on this bond should be 4%.

Assuming that the bond was just issued, calculate the current market price of the bond. Please round to the nearest dollar.

$nothing

What would be the price of a similar, just-issued bond with a zero coupon? Please round to the nearest dollar.

$nothing

Returning to the original bond problem (with a 7% coupon), what is the present value of the future coupon payments? Please round to the nearest dollar.

$nothing

Lets say you want to calculate the price of a similar bond that was issued six years ago. How would you change your method of calculating the price?

A.

Change the value of n to 8

B.

Change the value of n to 6

C.

Dont do anything differently

D.

Change the value of n to 12