1)

a. Consider a $1,000 par value bond with a 6% coupon rate paid semiannually, and has 9 years to maturity. What is the price of the bond if it is priced to yield 7%?

b. Cutler Co. issued 11-year bonds a year ago at a coupon rate of 7.8 percent. The bonds make semiannual payments. If the YTM on these bonds is 8.6 percent, what is the current bond price?

c. A $1000 bond with a coupon rate of 6.2% paid semiannually has eight years to maturity and a yield to maturity of 8.3%. If interest rates rise and the yield to maturity increases to 8.6%, what will happen to the price of the bond?