Question: PART 1 Bond A has the following features: Face value = $1,000, Coupon Rate = 9%, Maturity = 9 years, Yearly coupons The market interest

PART 1

Bond A has the following features:

Face value = $1,000,

Coupon Rate = 9%,

Maturity = 9 years, Yearly coupons

The market interest rate is 5.47%

If interest rates remain at 5.47%, what will the price of bond A be in year 1?

PART 2

Bond B has the following features:

Face value = $1,000,

Coupon Rate = 5%,

Maturity = 7 years, Yearly coupons

The market interest rate is 4.89%

What is todays price of bond B?

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