Problem #2

a.	Assume the interest rate in the market (yield to maturity) goes down to 8 percent for the 10 percent bonds. Using column 2, indicate what the bond price will be with a 15-year, a 20-year, and a 30-year time period.

Maturity	Bond Price
15 year	$
20 year	$
30 year	$

b.	Assume the interest rate in the market (yield to maturity)goes upto 12 percent for the 10 percent bonds. Using column 3, indicate what the bond price will be with a 15-year, a 20-year, and a 30-year period.

Maturity	Bond Price
15 year	$
20 year	$
30 year	$

c.

Assume the interest rate in the market (yield to maturity) goes down to 8 percent for the 10 percent bonds. If interest rates in the market are going down, which bond would you choose to own?

	15 years
	20 years
	30 years

d.

Assume the interest rate in the market (yield to maturity) goes up to 12 percent for the 10 percent bonds. If interest rates in the market are going up, which bond would you choose to own?

	15 years
	20 years
	30 years