Question 1B. (Please report calculations up to the 3rd decimal point) Consider a bond with $100 par value, annual coupon rate of 2% and 10 years to maturity. Assume that coupon payments are annual. a) Assume the annual required yield is 1.5%. i. What is the price of the bond? (3 marks) ii. By what percentage does the price of this bond change if the annual required yield increases by 20 basis points from 1.5% to 1.7%? (2 marks) b) Now, assume the annual required yield is 10%. i. What is the price of the bond? (3 marks) ii. By what percentage does the price of this bond change if the annual required yield increases by 20 basis points from 10% to 10.2%? (2 marks) c) Without further calculations, explain why the same change of 20 basis points in interest rates led to different percentage changes in the bond price in points a) and b) above. (10 marks)