(Answered) Zang international chinese chemical company has a 15 annual

Finance

Zang international Chinese chemical company has a 15% annual coupon interest rate on a $1,000 par value bond with 20 years left to maturity. Bonds of same maturity now sell to yield 11% return?

(a) How much would you be willing to pay for one of these bonds today? Why?

(b) If the bond is selling for $ 1,141 what is the yield to maturity?

(c) Explain why some bonds sell at a premium over par value while other bonds sell at a discount. What do you know about the relationship between the coupon rate and the YTM for premium bonds? What about for discount bonds? For bonds selling at par value?

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