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Suppose an 8% coupon, 3 year bond is issued that pays coupons annually. The discount rate is 6% and is the same for all coupons

Suppose an 8% coupon, 3 year bond is issued that pays coupons annually. The discount rate is 6% and is the same for all coupons and the face value.

A. What is the price of this bond? What is the current yield? Is it a premium bond or discount bond?

B. One year later, the bond is now 2 years to maturity. Assuming the discount rate is unchanged, what is the price of the bond now?

C. Now suppose the discount rate is 10% instead of 6%. What is the price of the bond at issuance? What is the current yield? Is it a premium bond or discount bond?

D. Following C, one year later, the bond is now only 2 years to maturity. Assuming the discount rate is unchanged, what is the price of the bond now?

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