Part A:

What price would you pay for a 3-year, BB bond with a Face Value of $1000 and semi-annual coupon rate of 8%

\begin{tabular}{|l|l|r|r|r|r|r|} \hline Security rating & Rating & Years Maturity & Face Value & Coupon Rate Market Price Yield to Mat. \\ \hline treasury & & 1 & $1,000 & 0.00% & $966.66 & 3.45% \\ \hline treasury & & 3 & $1,000 & 2.00% & $939.06 & 4.20% \\ \hline treasury & & 5 & $1,000 & 4.40% & $932.42 & 6.00% \\ \hline treasury & & 10 & $1,000 & 7.20% & $1,007.12 & 7.10% \\ \hline treasury & & 20 & $1,000 & 6.60% & $908.25 & 7.50% \\ \hline Corp A & A & 5 & $1,000 & 8.10% & $1,000.00 & 8.10% \\ \hline Corp B & BB & 10 & $1,000 & 7.90% & $859.88 & 10.20% \\ \hline Corp C & AA & 20 & $1,000 & 8.20% & $972.22 & 8.49% \\ \hline \end{tabular} \begin{tabular}{|l|l|r|r|r|r|r|} \hline Security rating & Rating & Years Maturity & Face Value & Coupon Rate Market Price Yield to Mat. \\ \hline treasury & & 1 & $1,000 & 0.00% & $966.66 & 3.45% \\ \hline treasury & & 3 & $1,000 & 2.00% & $939.06 & 4.20% \\ \hline treasury & & 5 & $1,000 & 4.40% & $932.42 & 6.00% \\ \hline treasury & & 10 & $1,000 & 7.20% & $1,007.12 & 7.10% \\ \hline treasury & & 20 & $1,000 & 6.60% & $908.25 & 7.50% \\ \hline Corp A & A & 5 & $1,000 & 8.10% & $1,000.00 & 8.10% \\ \hline Corp B & BB & 10 & $1,000 & 7.90% & $859.88 & 10.20% \\ \hline Corp C & AA & 20 & $1,000 & 8.20% & $972.22 & 8.49% \\ \hline \end{tabular}