You are required to price a treasury bond with a coupon rate $7\%$ paid annually. The par

value of the bond is $$1,000.$ The maturity of the bond is $3$ years.

i$.$ State the principles of bond valuation and assumptions.

ii$.$ What is the price of the bond when YTM is $9\%$ annually?

iii. What is the price of the bond when YTM is $5\%$ annually?

iv$.$ Use a diagram to illustrate the relation between bond price and interest rate.

v$.$ Explain at which situation a bond is priced at a discount, premium or at par value.