A General Power bond carries a coupon rate of 8.5%, has 9 years until maturity, and sells at a yield to maturity of 7.5%. (Assume annual interest payments.)

a.What interest payments do bondholders receive each year?

b.At what price does the bond sell? (Round your answers to 2 decimal places).

c.What will happen to the bond price if the yield to maturity falls to 6.5%? (Round your answers to 2 decimal places)

price will -------- by ----------

d.If the yield to maturity falls to 6.5%, will the current yield be less, or more, than the yield to maturity?

One bond has a coupon rate of 5.2%, another a coupon rate of 8.1%. Both bonds pay interest annually, have 10-year maturities, and sell at a yield to maturity of 7.0%.Do not round intermediate calculations. Enter your answers as a percent rounded to 1 decimal place.)

a.If their yields to maturity next year are still 7.0%, what is the rate of return on each bond?

Bond 1 Bond 2

Rate of Return % %