Question: answer question 1 and 2 with full answers 1) Suppose a five-year, $1,000 bond with annual coupons has a price of $900 and a yield

answer question 1 and 2 with full answers

1) Suppose a five-year, $1,000 bond with annual coupons has a price of $900 and a yield to maturity of 6%. What is the bond's coupon rate? 2) Grummon Corporation has issued zero-coupon corporate bonds with a five-year maturity. Investors believe there is a 20% chance that Grummon will default on these bonds. If Grummon does default, investors expect to receive only 50 cents per dollar they are owed. If investors require a 6% expected return on their investment in these bonds, what will be the price and yield to maturity on these bonds

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