Problem $13-01$

A $$1,000$ bond has a coupon of $7$ percent and matures after ten years.

Assume that the bond pays interest annually.

a$.$ What would be the bond's price if comparable debt yields $9$ percent? Use

Appendix B and Appendix D to answer the question. Round your answer to

the nearest dollar.

$

b$.$ What would be the price if comparable debt yields $9$ percent and the bond

matures after five years? Use Appendix B and Appendix D to answer the

question. Round your answer to the nearest dollar.

$

c$.$ Why are the prices different in a and $b?$

The price of the bond in $a$ is

than the price of the bond in $b$

as the principal payment of the bond in $a$ is

than the

principal payment of the bond in $b($in time$).$

d$.$ What are the current yields and the yields to maturity in a and $b?$ Round

your answers to two decimal places.

The bond matures after ten years:

CY:

$\%$

YTM:

$\%$

The bond matures after five years:

CY:

$\%$

YTM:

$\%$