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XYZ has a $1000 Face Value 5% Coupon Bond (paid semi-annually). The bond is selling for $937.19 today and matures in 8 years. (The YTM today is 6.0%)
a) What will be the price of the bond in 1 year (the bonds now have 7 years left until maturity) if the YTM investors demand in 1 year is still 6.0%?
b) What will be the price of the bond in 1 year (the bonds now have 7 years left until maturity) if the YTM investors demand in 1 year is 5.7%?
(Please show how)
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