4

Shih Inc. bonds have a coupon rate of 8% with 11 years to maturity and semi-annual payments. At maturity the bond will pay $1000. If the yield to maturity is 10%, what is the current price? If interest rates falls suddenly by 2%, what is the percent change in price? a) $868.37,15.2% b) $1441.51,12.6% c) $1441.51,12.6% d) $868.37,15.2%