How do I solve this practice problem? I keep getting the wrong answer. Tom bought a bond one year ago which had a $1000 face value, with annual payments, 15 years to maturity 12 and paid a 5.25% coupon. At the time he bought the bond, the appropriate interest rate was 8%. It is now one year later and interest rates have declined to 6.5%. Based on this, what was Tom's holding period return on the bond? Hint, you need to start by calculating the price paid for the bond a year ago. Review the lecture notes.

A. Here I want you to look at and think about key relationships. Assume there is a bond currently selling at $1,150 (face value of $1,000). The bond has an annual coupon payment of $90 and matures in 17 years.

i. What is the coupon rate?

ii. What is the yield to maturity on the bond?

iii. What is the current yield?

iv. Is this a discount, premium or par bond?

v. Given the above, show the relationship between your results for i, ii, and iii.