1. In June 2016, ZEM plc issued a corporate bond with face value of 100, coupon rate of 11%, maturing in June 2023. The bond was issued at par value. What was the price investors would pay for this bond in June 2016 if, at time of issue, the market interest rate for bonds of similar risk was 8%? State clearly any assumptions you made.
2. What is the bonds value today (June 2021) if interest rates fell by 3% in the five years following its issue?

Does a fall in the return that investors require have a larger effect on the price of long-term bonds or short-term bonds? Explain