Consider a U.S. government bond with as 63% coupon that expires in December 2020.The Par Value of the bond is $1,000. Coupon payments are made semiannually (June 30 and December 31 for this particular...

Consider a U.S. government bond with as 63% coupon that expires in December 2020.The Par Value of the bond is $1,000. Coupon payments are made semiannually (June 30 and December 31 for this particular bond).

1. On January 1, 2016, the required yield is 5%. What is the current value？


2. Find the present value (as of January 1, 2016), of a 8% coupon bond with semi- annual payments, and a maturity date of December 2020 if the YTM is 5%.


3. Now assume that the required yield is 11%. How does this change the bond’s price?