1. Suppose a 10-year, $1000 bond with an 8% coupon rate and semi-annual coupons is trading for a price of $1034.74.

a. What is the bond’s yield to maturity (expressed as an APR with semi-annual compounding)?

b. If the bond’s yield to maturity changes to 9% APR, what will the bond’s price be?

2. Suppose a five-year, $1000 bond with annual coupons has a price of $900 and a yield to maturity of 6%. What is the bond’s coupon rate?


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