$($Bond valuation relationships$)$ A bond of Visador Corporation pays $$80$ in annual interest, with a $$1,000$ par value. The bonds mature in $21$ years. The market's required yield to maturity on

a comparable$-$risk bond is $7\mathrm{.}5$ percent.

a$.$ What is the value of the bond if the market's required yield to maturity on a comparable$-$risk bond is $7\mathrm{.}5$ percent?

$ $($Round to the nearest cent.$)$

b$.($i$)$ What is the value of the bond if the market's required yield to maturity on a comparable$-$risk bond increases to $12$ percent?

& $($Round to the nearest cent.$)$

b$.($ii$)$ What is the value of the bond if the market's required yield to maturity on a comparable$-$risk bond decreases to $6$ percent?

$($Round to the nearest cent.$)$

c$.$ The change in the value of a bond caused by changing interest rates is called interest$-$rate risk. Based on the answers in part b$,$ a decrease in interest rates $($the yield to maturity$)$ will cause the value of a

bond to

; by contrast, an increase in interest rates will cause the value to

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Also, based on the answers in part $b,$ if the yield to maturity $($current interest rate$)$:

equals the coupon interest rate, the bond will sell at

exceeds the bond's coupon rate, the bond will sell at

; and

is less than the bond's coupon rate, the bond will sell at

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