13. A. Company Corporations bonds mature in 14 years and pay 7% interest annually. If you purchase the bonds for $1110.00, what is your expected rate of return? (3 Marks)

2. A Company Corporations bonds pay $70 in annual interest, with a $1,000.00 par value. The bond matures in 17 years. Your required rate of return is 9%

1. Calculate the value of the bond. (3 Marks)

(ii) How does the value change if your required rate of return (a) increases to 11% (b) decreases to 6% (4 Marks)

3. Interpret your findings in part (i) and (ii) (4 Marks)