Use the following facts for this question and the two that follow.

You have been asked to analyze a four-year semi-annual pay bond with a par value of $1,000 and a 4% coupon rate; the bond is currently priced at 93.235.

Part A:

What is the yield to maturity (YTM) if an investor purchased the bond at the current price?

This bonds indenture permits this bonds coupon payments and face value at maturity to be split and sold separately to different investors as a coupon only (strip bond) and a zero coupon bond respectively.

Part B:

A pension fund is interested in purchasing the zero coupon bond. What is the maximum amount the fund should pay if they have a required annual yield of 5% compounded semi-annually?

Part C:

An insurance company is interested in purchasing the strip bond. What is the maximum amount the insurance company should pay if they have a required annual yield of 6% compounded semi-annually?