Here are data on $$1,000$ par value bonds issued by Microsoft, GE Capital, and Morgan Stanley. Assume you are thinking about buying these bonds. Answer the following questions:

a$.$ Assuming interest is paid annually, calculate the values of the bonds if your required rates of return are as follows: Microsoft, $6$ percent; GE Capital, $9$ percent; and Morgan Stanley, $13$ percent; where:

;MICROSOFT;GE CAPITAL;MORGAN STANLEY

Coupon interest rate;$4\mathrm{.}25\%$;$3\mathrm{.}25\%$;$3\mathrm{.}75\%$

Years to maturity;$22$;$16$;$6$

b$.$ The bonds are selling for the following amounts

Microsoft $$$$861$

GE Capital $$$$601$

Morgan Stanley $$$$723$

What are the expected rates of return for each bond?

c$.$ How would the value of the bonds change if $(1)$ your required rate of return $(r_b)$ increased $2$ percentage points or $(2)$ decreased $2$ percentage points?

d$.$ Explain the implications of your answers in part $c$ in terms of interest rate risk, premium bonds, and discount bonds.

e$.$ Should you buy the bonds? Explain.