A $25-$year, $6\%$ semiannual coupon bond with a par value of $$1,000$ may be called in $5$ years at a call price of $$1,010.$ The bond sells for $$1,060.($Assume that the bond has just been issued.$)$

a$.$ How would the price of the bond be affected by a change in the going market interest rate? $($Hint: Conduct a sensitivity analysis of price to changes in the going market interest rate for the bond. Assume that the bond will be called if and only if the going rate of interest falls below the coupon rate. This is an oversimplification, but assume it for purposes of this problem.$)$ Round your answers to the nearest cent.

Nominal market rate Actual bond price

$0\%$ $

$2\%$ $

$4\%$ $

$6\%$ $

$8\%$ $

$10\%$ $

$12\%$ $

$14\%$ $

$16\%$ $e$.$ Assume that the bond will be called if and only if the going rate of interest falls belo

Conducting a sensitivity analysis of price to changes in the going market interest ra

Nominal market rate

Bond price if it's not called

Bond price if it's called

$12\%$ $

$14\%$ $

$16\%$ $