a. Assume the interest rate in the market (yield to maturity) goes down to 8 percent for the 10 percent bonds. Using column 2, indicate what the bond price will be with a 5-year, a 15-year, and a 30-year time period.

b. Assume the interest rate in the market (yield to maturity) goes up to 12 percent for the 10 percent bonds. Using column 3, indicate what the bond price will be with a 5-year, a 10-year, and a 30-year period.

c. Based on the information in part a, if you think interest rates in the market are going down, which bond would you choose to own?

d. Based on information in part b, if you think interest rates in the market are going up, which bond would you choose toown?

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Time Period in Years Bond Price with 8 % Bond Price with 12% Yield Yield to Maturity to Maturity (of 1000 bond) 10 15 20 25 30 ...$1,000.00 1,018.60 1,080.30 1,134.00 1,170.90 1,196.80 1,213.50 1,224.80 1,000.00 982.30 927.50 887.00 864.11 850.90 843.30 838.50