Corporate ABC s bond, has 4 years to mature. Par value is $1000, coupon rate is 7%, and it pays coupon once a year. The market prime rate is 5%, and you add an additional 3% risk premium given the risk of the bond. Label your answers for questions 1 - 5. 1) What is the bond worth to you? Show work for partial credit. 2) If the current market price for the bond is $98011, what is the yield to maturity of the bond? (keep in mind bonds are priced in 1/32 fractions) Show work for partial 3) From the results of 1) and 2), would you invest in the bond? 4) If your friend is more risk averse than you, would he invest in the bond? EXPLAIN WHY. 5) From 2), what is the duration of the bond? If everything else stays the same, while the bond pays coupon semi-annually, will the duration increase or decrease? Will its price be more or less sensitive to interest rate changes