Question: Problem 2: A one year bond with a coupon rate of 9% per annum payable semiannually and a redemption value of $100 is priced at

Problem 2:A one year bond with a coupon rate of 9% per annum payable semiannually and a redemption value of $100 is priced at $88.

a. Use the Salesman's Rule to approximate the per annum yield to maturity.

b. Use algebra to find the per annum yield to maturity compounded semiannually. Please be accurate to 4 places after the decimal point.

c. Generalize your work. Given C (semiannual coupon), M (maturity value), and P (the price) algebraically express i (semiannual yield to maturity) in term of C, M, and P. Remember that i will be positive.

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