Problem 2 A simple 1-year no-coupon bond is issued with a face value of $5000 Demand for this bond is: D: P = 7500 -0.39 Supply for this bond is: S: p = 4000 +1.70 a) What is the price of that bond? b) What is the interest rate on that bond? c) Draw this market for the bond. d) Assume that investors perceive additional risk for this company increase their required rate of return by 2% over what you found in part b). What would the price of the bond be now? Draw this new equilibrium on your graph. e) What is the price elasticity of this bond? f) Can you compute the new demand function for this bond