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,

5.5 percent; GE? Capital, 18 percent; and Morgan? Stanley,11.5 percent; where:

b. The bonds are selling for the following? amounts:

Microsoft ?$1052

GE Capital ?$327

Morgan Stanley ?$731

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 Subscript brb?) 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.