question1

You want to buy a $1000 face value US Treasury bond with a maturity of three years. The coupon rate is 7% ( with annual interest payments). the yield to maturity is 6%

a) what is the basic cash flow formula for calcuating the present value of any generic bond?

b) using the answer to above part a, insert the specific bond information above into it and calculate its present value.

c) what are the bond valuation formulas you would use to value a generic three years bond if you wanted to utilize an annuity formula?

d) using the answer to above part C , insert the specific bond info from part C, into them, and calculate the present value.