A $1,000 par value bond has a 7 percent coupon, which is paid on a semiannual basis. It matures in either 2 years or 20 years. Current yields on similar bonds are either 6 percent or 10 percent.

a. Calculate the price of the bond for the four possibilities. (Use a Financial calculator to arrive at the answers. Do not round intermediate calculations. Round the final answer to 2 decimal places.)

		Price of the bond
2 years	6 percent	$
2 years	10 percent	$
20 years	10 percent	$
20 years	6 percent	$

b. What is the relationship between price and yield?

Price and yield are (Click to select) Inversely Directly related.

c. What is the relationship between bond price changes and time to maturity?

Bond prices change (Click to select) less for longer terms, more for longer terms, for a given yield change.