On 1 April 2020, Pioneer Limited issued bonds with a face value of $1,000,000 that mature on 1 October 2025. The bond certificates indicate that the stated coupon rate for the bond is 10% p.a. with interest payable half-yearly and the yield to maturity is 12% p.a. payable half-yearly.

1. Calculate the annual coupon payment. (2 marks)

2. Calculate the bond price on 1 April 2020. (2 marks)

3. Is this bond is trading at par or at premium or at discount? Explain (2 marks)

4. What happens to the bond price over time until it reaches maturity? (2 marks)

5. Calculate the current yield. (2 marks)