$5$ ments of $$100$ one year from Consider a bond that promises to make coupon pay $100$ one year from now and $$100$ two years from now, and to repay the principal of $$1000$ three years from now. Suppose also that the market interest rate is $8$ percent per year, and that no perceived risk is associated with the bond. a$.$ Compute the present value of this bond. b$.$ Suppose the bond is being offered for $$995.$ Would you buy the bond at that price? What do you expect to happen to the bond price in the very near future? C$.$ Suppose the bond is instead being offered at a price of $$950.$ Would you buy the bond at that price? Do you expect the bond price to change in the near future? d$.$ If the price of the bond is equal to its computed present value from part $($a$),$ what is the implied bond yield? e$.$ Explain why bond yields and the market interest rate tend to move together so that economists can then usefully refer to $$the$$ interest rate.