Question

Three years ago, you bought a bond for $737.64. At that time, the bond had seven...

Three years ago, you bought a bond for $737.64. At that time, the bond had seven years remaining until maturity. The bond has a coupon rate of 8 percent (stated as an annual rate) and a par value of $1,000. Coupon payments are made semiannually.

a. What was the yield to maturity when you purchased the bond three years ago?

b. Assume the yield to maturity today is the same as the yield to maturity you computed in part A. What is the value of the bond today?

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