A.

Bond Features
Maturity (years) =	7
Face Value =	$1,000
Starting Interest Rate	4.28%
Coupon Rate =	4%
Coupon dates (Annual)

If interest rates change from 4.28% to 6.45% immediately after you buy the bond today (and stay at the new interest rate), what is the price effect in year 2 ?

State your answer to the nearest penny (e.g., 48.45)

If there is a loss, state your answer with a negative sign (e.g., -52.30)

B.

Assume you buy a bond with the following features Bond maturity = 4 Coupon Rate = 5% Face Value = $1,000 Annual Coupons When you buy the bond the market interest rate = 4.24% Immediately after you buy the bond the interest rate changes to 7.15% What is the "reinvestment" effect in year 3 ?