How much would you be willing to pay for a 6.25% coupon bond with 8 years remaining to maturity, with par value of $1000, when the going rate of interest is 7%? Coupon = 0.0625 * 1000 62.50; PV of coupons can be calculated as follows; PV i%, n years annuity 1/i - 1/i(1 + i)^n = PV 6.25%, 8 years annuity = 1/.07 - 1/.07 (1 + .07)^8 Or use table 3 = 5.9713 PV of par can be calculated as follows; 1/(1+i)^N = 1/(1+.07)^8 or use table 2 = 0.5820 Bond price 62.50 * 5.9713 1000 * 0.5820 = If you pay $900 for purchasing a 5.25% coupon bond, with 6 years remaining to maturity, with par value of $1000, what would be your yield to maturity? Coupon = .0525 * 1000 = 52.50 YTM Approximate