Question: 3. (20 points) You are evaluating a bond for possible investment. The coupon is 8.5%, the maturity is 16 years, and the coupon is

3. (20 points) You are evaluating a bond for possible investment. The

3. (20 points) You are evaluating a bond for possible investment. The coupon is 8.5%, the maturity is 16 years, and the coupon is paid semiannually. The YTM for the bond is 9.2%, and the par value is $1000. a. What is your estimate of the value of the bond? b. If you could reinvest coupons at 10.2%, what is your estimate of the horizon return?

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