Solve the following problem using the formula.
Using the information below, compute the prices of the following SEMI-ANNUAL payment bonds. Show your computation in every case.
Per value Coupon Rate Yield to Maturity Years to Maturity
$ 5,000 10 12% 20
$ 5,000 10 10 20
$ 5,000 10 6 20
A) Indicate which bond is selling at discount, par, and premium. (Use the formula)
B) What is the relationship between bond prices and interest rates?