PLEASE ANSWER QUESTION NUMBER 2, QUESTION ONE IS ONLY POSTED BECAUSE SOME INFORMATION IS NEEDED FOR QUESTION 2. THANKS! AND I WILL RATE IT.

Question 1 [5 pts]

Suppose you are considering purchasing a bond issued by Pacific Energy Corp (PEC). The PECs bond has 15 years to maturity and pays an annual coupon of $60 with a face value of $1,000. If the market commands a yield to maturity (YTM) of 6% for other bonds with a similar risk and maturity, how much would you be willing to pay for the PECs bond?

Question 2 [5 pts]

Consider the PEC bond described in Question 1 with the following change:

Suppose the bond makes an annual coupon of $70 (other terms remain unchanged). What will be the price of the PEC bond? Is the bond par, discount, or premium?

Answer (show the steps/calculation toward your results):