1. a) Each bond differs with respect to risk and expected return. Differentiate between treasury bonds, corporate bonds, municipal bonds and foreign bonds.
  2. b) TexasCorporation has a level-coupon bond with a 9% coupon rate and is paid The bond has 20 years to maturity and a face value of RM1,000; similar bonds currently yield 7%. By prior agreement, the company will skip the coupon interest payments in years 8, 9, and 10. These payments will be repaid, without interest, at maturity.

Calculate the bond’s current value.