This question asks you to compare a two$-$year government T$-$Bill to a two$-$year

government coupon bond. The coupon bond has face value $$1000$ and pays an

annual coupon of $$80$; it has a YTM of $8\%.$ The T$-$Bill has a face value of $$1000$

and has current price $($time t$)$ equal to $$873\mathrm{.}43.$

$($a$)$ What is the price of the coupon bond; i$.$e$.$ find Pt for the coupon bond? Explain your

reasoning $($hint$,$ there is a short cut$)$ or show your calculations.

$($b$)$ Which bond has the higher yield to maturity $($what the text refers to as the interest

rate$)?$ Show your calculations