Question: how to solve it? Question 3 (20 points): (see problem set 1 for Answers) You are considering buying a bond that pays 10 percent coupon
how to solve it?

Question 3 (20 points): (see problem set 1 for Answers) You are considering buying a bond that pays 10 percent coupon interest rate per year with the coupon paid annually. The bond has a face value (FV) of $1,000. (10 points) a. Calculate the market price of the bond if the required rate of return (YTM) on this bond is 6% and the bond matures in 15 years. b. Can this bond be labelled as a premium bond, a discount bond or a par bond based on your findings in (a)? if yes, why? (5 points) c. Calculate the YTM that makes this bond a par bond. (5 points)
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