Peter Pan Flying Company issued 15-year bonds three years ago at a coupon rate of 8% per annum with a face value of $1000. The bonds make semi-annual payments. The yield to maturity on these bonds is 7.5%.
3.1 Calculate the price of a bond at Peter Pan Flying Company. Provide the relevant equation.
3.2 Would you regard this bond as a par value, discount value or premium value bond? Provide two reasons for your choice.
3.3 How many bonds of Peter Pan Flying Company can you purchase if you have $100 000 available to invest in bonds?
