Number 1

A. Mr. Marrow has just purchased a 5year, $1,000 par value bond. The coupon rate on this bond is 9%, and the interest is paid annually. If he expect to earn a 10 percent yield to maturity on this bond, how much did he pay for it?

B. 10-year, 8% coupon bond that pays interest annually is currently selling for $1,083. What is the yield to maturity of the bond? [The face value of the bond is $1,000]

C. A four-year bond has an 10% coupon rate and a face value of $1000. If the current price of the bond is $870.51, calculate the yield to maturity of the bond (assume annual interest payments). Also, indicate whether the bond is a discount bond or a premium bond or a par bond.