Question: 1. A 15-year bond is issued with a face value of $10,000, paying interest of $750 a year. If yields to maturity in the market

1. A 15-year bond is issued with a face value of $10,000, paying interest of $750 a year. If yields to maturity in the market increase shortly after the bond is issued, what happens to the bonds:

a. Coupon rate?

b. Price?

c. Yield to maturity?

2. A 10-year bond with a face value of $1,000 pays a coupon of 6% per year (3% of face value every six months). The reported yield to maturity is 5.5% per year (a six-month discount rate of 5.5/2 = 2.75%). What is the present value of the bond?

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