Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) increase from 8 to 14 percent. a. What is the bond price at 8 percent?

b. What is the bond price at 14 percent?

c. What would be your percentage return on the investment if you bought when rates were 8 percent and sold when rates were 14 percent? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Ta ble 10-1 Bond price table (10% Interest Payment, 20 Years to Maturity) Yield to Maturity PV of Coupons $1,635.14 1,359.03 1,146.99 1,059.40 981.81 912.85 851.36 796.33 746.94 702.48 662.31 592.88 486.96 395.39 PV of Principal $672.97 456.39 311.80 258.42 214.55 178.43 148.64 124.03 103.67 86.78 72.76 51.39 26.08 11.53 Bond Price $2,308.11 1,815.42 1,458.80 1,317.82 1,196.36 1,091.29 1,000.00 920.37 850.61 789.26 735.07 644.27 513.04 406.92 2% 6% 7% 8% 9% 10% 11% 12% 13% 14% 16% 20% 25%