A 4-year 6.8% coupon bond is selling to yield 7%. The bond pays interest annually. One year later interest rates decrease from 6.8% to 6.2%.

2.1. What is the price of the 4-year 6.8% coupon bond selling to yield 7%?

2.2. What is the price of this bond one year later assuming the yield is unchanged at 7%?

2.3. What is the price of this bond one year later if instead of the coupon being unchanged the

yield decreases to 6.2%?

2.4. What will be the price change attributable to moving to maturity (pull to par)?

2.5. What will be the price change attribute to an increase in the discount rate from 6.2% to

7%?