Questions 2: Bond Price and Interest rate sensitivity (25 points) 1. Renfro Rentals has issued bonds that have a 10% coupon rate, payable semi-annually. The bonds mature in 5 years, have a face value of 1000$, and YTM of 8.5%. What is the price of the bonds? (15 points) 2. A bond trader purchased each of the following bonds at a YTM of 8%. Immediately after she purchased the bonds, interest rate fell to 7%. What is the percentage change in the price of each bond after the decline in interest rates? Fill the following table: (10 points) Maturity Coupon Price at 8% Price at 7% Percentage change 4 year 10% 900.63 932.25