(Bond valuation relationships)Arizona Public Utilities issued a bond that pays $60 in interest, with a $11,000 par value. It matures in 20 years. The market's required yield to maturity on a comparable-risk bond is 7 percent.

a. Calculate the value of the bond.

b.How does the value change if the market's required yield to maturity on a comparable-risk bond (i) increases to 11 percent or (ii) decreases to 6 percent?

c.Explain the implications of your answers in part b as they relate to interest-rate risk, premium bonds, and discount bonds.

d.Assume that the bond matures in 10 years instead of 20 years. Recompute your answers in parts a and b.

e.Explain the implications of your answers in part d as they relate to interest-rate risk, premium bonds, and discount bonds.

e.From the findings in part d, we can conclude that a bondholder owning a long-term bond is exposed to _______(more, the same, or less) interest-rate risk than one owning a short-term bond

a. What is the value of the bond if the market's required yield to maturity on a comparable-risk bond is 7 percent? $1-1 (Round to the nearest cent) b. () What is the value of the bond if the market's required yield to maturity on a comparable-risk bond increases to 11 percent? ST (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? S(Round to the nearest cent.)