3. Kramerica Industries Inc. issued 15 year bonds 5 years ago. The bonds offer an 8.5% annual coupon rate. Currently, the bonds sell at a price of $1,025. (3 points)

a. Are these bonds discount, par value, or premium bonds? ______________________________

b. Assuming semi-annual coupon payments, what is this bond's yield to maturity (YTM)?

c. If the YTM were to increase by one percentage point, what would you expect to happen to the price of the bond?

d. By what percentage would the price of the bond change as a result of a 1% increase in the YTM?

(Worked needed)