The Coleman-Smith Corporation has an outstanding bond that matures in exactly 10 years. The bonds have an annual coupon of 5%. The current market interest rate is 8%.

A: Assume the bonds have a face value of 1,000. What should be the bond's price?

B:

Now assume that the last 4 coupons were stripped from the bond and sold off separately. What would be the value of the remaining bond?

(As a technical matter, you should assume that the yield curve is flat. If you don't know why this is important, don't worry about it.)