Question $2(1$ point$)$

A bond has a $$1,000$ par value, $17$ years to maturity, and a $5\mathrm{.}5\%$ annual coupon and sells for $$900.$

a$)$ What is its yield to maturity $($YTM$)?$

b$)$ Assuming that the yield to maturity remains constant, what will the price be $1$ year from today?

a$)5\mathrm{.}50\%$; b$)$ $$903\mathrm{.}39$

a$)5\mathrm{.}50\%$; b$)$ $$1,000\mathrm{.}00$

a$)6\mathrm{.}49\%$; b$)$ $$903\mathrm{.}39$

a$)6\mathrm{.}49\%$; b$)$ $$4,204\mathrm{.}22$

Page $2$ of $11$