Bill buys a $20000 face value bond. The coupon rate on the bond is 10% and it mature in 11 years. The current interest rate is 9.75% compounded quarterly.

a) How much should Bill pay for the bond?

b) Is he buying it at a premium or a discount? How much is the premium/discount?

c) Construct the first 4 rows of the amortization table for this bond.

d) How long (how many coupon periods) until the premium/discount on the bond is less than half the initial premium/discount?

e) What would the current interest rate have to be so that the initial premium/discount on the bond doubles?