Two bonds have 6 years to maturity and payable semi-annually, par value of 1000 and a yield to maturity 0f 7% per annum. Bond A is a zero-coupon and whereas bond B has a coupon rate of 8% per annum.
(a) Calculate the price and current yield of bond A and Bond B. Explain A and B bond selling at a discount, premium or par?
(b) One would like to invest another 8 years corporate bond, which of the term as mentioned above is desirable? How does each feature affect the required rate of return for the bond?