1. ABC has issued a $1000 par bond with 25 years to maturity, 7% coupon rate, and...

Question:

1. ABC has issued a $1000 par bond with 25 years to maturity, 7% coupon rate, and semi-annual payments. Calculate the present value if the bond if the YTM is 7%.

2. How would the answer to #1 change if the YTM is 9%?

3. How would the answer to #1 change if the YTM is 5%?

4. What bond relationship are Problems 1-3 discussing?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...