1. Bippity Boo Inc. had issued 8 percent coupon bonds on the market that has 10 years left to maturity with a face value of $10,000. The bonds make semi-annual payments. If yield-to-maturity on these bonds are 9 percent. What is the current bond price (8 marks)

2. Suppose Bippity bought a 9 percent coupon, 30-year bond today when it first issued. If interest rate were to rise to 16 percent, explain what happens to Bippity bond value? (4 marks)