Consider a five-year, 15 per cent bond annual coupon bond with a face value of $1,000. The bond is trading at a market yield to maturity of 8 percent

a. What is the price of the bond? (Assume the bond is priced at the coupon date)

b. If the market yield to maturity increases 1 percent, what will be the bonds new price?

c. Using your answers to parts (a) and (b), what is the percentage change in the bonds price as a result of the 1 percent increase in interest rates?