Question 1: Consider a standard coupon bond ($1,000 face value with semi-annual coupons) has a coupon rate of 9% and a yield to maturity of 6% over its 20 year remaining life. a) What would be its price (now)? b) What would be the bond's current yield and it's capital gain (loss) yield? c) What would the price of the above bond be, 5 years later is the yield to maturity had dropped 100 basis points over the 5-year period? Note: To answer the next 4 questions, reference your notes from our session and the stock worksheet that was distributed. In particular, there are a 2 new relationships that we discussed and that will help us answer these questions: Total Return = ke = Dividend Yield (DY) + Capital Gains Yield (CGY) D/P, (P. - Po)/P, = D/P, +g (expression above is "g") Estimation of the Growth Rate (g): g = Retention Ratio ROE