Exe. Bond.3.2

Question 11: Bond Pricing

A General Motors bond carries a coupon rate of 8 percent, has 9 years until maturity, and sells at a yield to maturity of 7 percent.

a)      What interest payments do bondholders receive each year?

b)      At what price does the bond sell?

c)      What will happen to the bond price if the yield to maturity falls to 6 percent ?