Please help me to answer the questions below.

28.You are considering purchasing a bond with the following characteristics:

par value = $1,000

coupon rate = 4% per year

payment schedule = semiannual

maturity date = 10 years

required rate of return = 6% per year

A. Draw a time line illustrating the expected future cash flows for this bond.

B. What is the highest price you would be willing to pay for this bond and still receive your required 6% annual return? In other words, what is the value of the bond?

C. Assume that the bond's current market price is $795. Would you be willing to buy the bond at this market price? Why or why not?

D. Assume that the current market price for this bond is $795. If you purchase the bond at this price, what will your return (yield-to-maturity) be?

29. Answer the questions below.

A.The time line below illustrates a series of semi-annual cash flows. Assume a discount rate (interest rate, required rate of return) of 5% per year, compounded semiannually. Calculate the present value (PV) of this mixed stream.

NOTE: the timeline is marked in semiannual periods.

0123456 pds

|----------------|---------------|----------------|-----------------|----------------|----------------|

500200- 3000500500

B.The time line below illustrates a series of annual cash flows. Assume a discount rate (interest rate, required rate of return) of 2.75% per year, compounded annually. Calculate the present value (PV) of this mixed stream.

NOTE: the timeline is marked in years.

0123456 yrs

|----------------|---------------|----------------|-----------------|----------------|----------------|

200200- 2000200500

B. The time line below illustrates a series of annual cash flows. Assume a discount rate (interest rate, required rate of return) of 2.75% per year, compounded annually. Calculate the present value (PV) of this mixed stream.

NOTE: the timeline is marked in years.

0 1 2 3 4 5 6 yrs

|---------------- |--------------- |---------------- |----------------- |---------------- |---------------- |

200 200 - 200 0 200 500

D. Refer to question 28, part D. What effect would a higher market price have on the bond's yield-to-maturity? Why?