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You are working for an investment company that intends to invest in corporate bonds available in the market. The face value of all the bonds
You are working for an investment company that intends to invest in corporate bonds available in the market. The face value of all the bonds is $1000. The bond currently under your consideration pays 5% coupon annually. The bond has 3 years to maturity. Market interest rate is equal to 10% - last digit of your ID (For Example if your ID ends in 3, it should be 10%- 3% = 7%; if your ID ends in 0, it should be 10% -0% = 10%). 1. Calculate the price of the bond today, 1 year from now, and 2 years from now (Hint: Today N=3, one year from now N=2, two years from now N=1). 2. Is your bond a premium bond or a discount bond? 3. Calculate annual returns (Current yield), your bond is paying every year. (Show all the working). 4. What will be the price of the bond at the time of maturity
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