1. Suppose that in January 2021 you are considering buying a corporate bond of BMX plc with 1000 face value, 6% coupon rate and maturity in January 2027. In January 2021, corporate bonds with a similar credit rating offered a yield to maturity (YTM) of about 4%.

1. What should be a fair price of the BMX bond? Support your answer with appropriate calculation.
2. Explain how your answer to part i) would change, if you were told that most market participants are expecting a downward sloping term structure of interest rates.