. You buy the 6 percent coupon bond today and the price of the bond is $1.012. Par value of

the bond is $1.000. The maturity of the bond is 3 years.

a) According to the information given above, what will be the bonds yield to maturity? (10p)

b) If the bond has currently 3 years left to maturity and suppose that by the end of the year,

interest rates have changed and the bonds yield to maturity is now only 4%. What will be the

bonds rate of return?