1. A $1,000 corporate bond (par value) which pays interest semi-annually has a 7% coupon and will mature in 3 years. If market interest rates rise to 8% for a bond of similar risk and maturity, what will be the new fair price of the bond to the closest dollar?

a. $974

b. $992

c. $893

d. $1,110

2. Estimate the market price of a bond with par value of $1,000, a 10 percent coupon with interest paid semi-annually, and three years to maturity if market interest rates have risen to 12 percent.

a. $1196.70

b. $950.83

c. $1,032.17

d. $922.80

3. A 10-year junk bond with a face value of $1,000 and a coupon of 8% is now selling for $1,050. It is currently selling at a ______ and its current yield is ____.

1. Discount; 8%
2. Premium; 8%
3. Discount; 7.6%
4. Premium; 7.6%

Please show work using formula, thanks