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You want to know the price of a 8% coupon bond that is currently being traded in the bond markets. The maturity of the bond
You want to know the price of a 8% coupon bond that is currently being traded in the bond markets. The maturity of the bond is 3 years, its par value is $1000, and it pays its coupons annually. You do not know the corresponding market interest rates, but you know the YTM of 8 % for the bond.
(1) What is the price of this bond?
(2) Does this mean that YTM is equivalent to the market interest rate determined in the bond market? Why, or why not?
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