a. What is the value of a 5-year, $1,000 par value bond with a 9 percent annual coupon if its required annual rate of return is 10 percent? Does the bond sell at par?

b. What would happen to the value of the above 5-year bond over time if the required annual rate of return remained at 10 percent?

c. What is the yield to maturity (YTM) on a 10-year, 9 percent annual coupon, $1,000 par value bond that sells for $1,050?

d. Suppose a 10-year, 10 percent, semiannual coupon bond with a par value of $1,000 is currently selling for $1,135.90, producing a yield to maturity (YTM) of 8 percent. However, the bond can be called after 5 years for a price of $1,025.

1. What is the bond's yield to call (YTC)?

2. If you bought this bond, do you think you would be more likely to earn the YTM or the YTC? Why?