a$.$ A $$1,000$ bond has an $8\mathrm{.}5$ percent coupon and matures after $9$ years. If current interest rates are $10$ percent, what should be the price of the bond? Assume that the bond pays interest annually. Use

Appendix $B$ and Appendix $D$ to answer the question. Round your answer to the nearest dollar.

$

b$.$ If after four years interest rates are still $10$ percent, what should be the price of the bond? Use Appendix B and Appendix D to answer the question. Assume that the bond pays interest annually. Round

your answer to the nearest dollar.

$

c$.$ Even though interest rates did not change in a and $b,$ why did the price of the bond change?

The price of the bond with the longer term is $-$ Select$-o+$ than the price of the bond with the shorter term as the investors will collect the $-$Select$-$ interest payments and receive the principal within a

longer period of time.

d$.$ Change the interest rate in a and $b$ to $6$ percent and rework your answers. Assume that the bond pays interest annually. Round your answers to the nearest dollar.

Price of the bond $(9$ years to maturity$)$: $

Price of the bond $(5$ years to maturity$)$: $

Even though the interest rate is $6$ percent in both calculations, why are the bond prices different?

The price of the bond with the longer term is

I than the price of the bond with the shorter term as the investors will collect the

I interest payments for a longer period of time.