Question: A 100 bond with two years to maturity and an annual coupon of 9 per cent is available. (The next coupon is payable in one

A £100 bond with two years to maturity and an annual coupon of 9 per cent is available. (The next coupon is payable in one year.)
a. If the market requires a yield to maturity of 9 per cent for a bond of this risk class what will be its market price?
b. If the market price is £98, what yield to maturity does it offer?
c. If the required yield to maturity on this type of bond changes to 7 per cent, what will the market price change to?

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