Problem $1$

Assume you are considering $6$ coupon bonds whose investment characteristics are given in the table below:

$\backslash$begin$\{$tabular$\}\{|$c$|$c$|$c$|$c$|\}$

$\backslash$hline Bond & Current Market Price & Coupon, $\backslash \%$ & Term to Maturity, years $\backslash \backslash$

$\backslash$hline A & $94\mathrm{.}125$ & $7\mathrm{.}82$ & $7\backslash \backslash$

$\backslash$hline B & $99\mathrm{.}842$ & $8\mathrm{.}25$ & $9\backslash \backslash$

$\backslash$hline C & $106\mathrm{.}041$ & $9\mathrm{.}14$ & $10\backslash \backslash$

$\backslash$hline D & $95\mathrm{.}074$ & $6\mathrm{.}86$ & $4\backslash \backslash$

$\backslash$hline E & $100\mathrm{.}893$ & $8\mathrm{.}61$ & $5\backslash \backslash$

$\backslash$hline F & $101\mathrm{.}221$ & $9\mathrm{.}12$ & $8\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$

Using the NPV approach define potential investment strategy in terms of buying $/$ selling these bonds. Compute these bonds' net present values, given the alternative rate of return $\backslash (7\mathrm{.}98\backslash \%\backslash ).$

Problem $2$

Using Problem $1$ data, calculate yield to maturity of all bonds. Which bonds are quoted at a premium and which bonds are quoted at a discount?