1.Suppose that you bought a 14% Drexler bond with time to maturity of 9 years for $1,379.75 (semiannual coupons, interest rate=8%). After another year, you sold the bond.

a.Assuming that the required rate of return remained at 8%, what would the selling price be? What is the rate of return from this investment?

b.Assuming that the required rate of return decreased to 7.5%, what would the selling price be? What is the rate of return from this investment?