Question: Your client has been offered a 10 -year, $1,000 par value annual bond with a 8 percent coupon rate and an YTM of 12%. Answer

Your client has been offered a 10 -year, $1,000 par value annual bond with a 8 percent coupon rate and an YTM of 12\%. Answer Q1-Q4. 1. The bond is a discount bond or premium bond? 2. What should be the price of the bond? 3. What is the current yield on the bond? 4. What is the capital gains yield of on the bond? 5. You have just purchased a 5 -year, $1,000 par value bond. The coupon rate on this bond is 6 percent annually, with interest being paid each 6 months. If you expect to earn a 10 percent simple rate of return on this bond, how much did you pay for it

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