You plan to raise an additional $200,000 to purchase this building by selling bonds. You issue $1,000 par value bonds maturing in 4 years at a coupon rate of 8% with semiannual coupon payments. The yield to maturity (YTM) on these bonds is 8% compounded semiannually when they are issued.

What is the value of a bond at issue?

What is the value of a bond in 2 years if the YTM increase to 4% compounded semiannually?

Explain why the value of a bond changes as the YTM changes over time.