A bond that will mature in three years has a coupon payment of $100; interest is paid and compounded annually. Its face value is $1,000 and the yield on bonds of similar risk and maturity is 7.5%. What will be the price of this bond? Suppose the market rate of interest rose to 12%; what would happen to the price of the bond? Use Excel to graph the relationship between the interest rate and the price of this bond.

4. A bond that will mature in three years has a coupon payment of $1200; interest is paid and compounded annually. Its face value is $25,000 and the yield on bonds of similar risk and maturity is 4.0%. What will be the price of this bond? Suppose the market rate of interest fell to 3.5%; what would be the new price of the bond