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) decline from 10 percent to 9 percent.

a. What is the bond price at 10 percent?

b. What is the bond price at 9 percent?

c. What would be your percentage return on investment if you bought when rates were 10 percent and sold when rates were 9 percent? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Table 10-1 Bond price table Yield to Maturity 2% 4% 6% 7% 8% 9% (10% Interest Payment, 20 Years to Maturity) PV of PV of Coupons Principal $1,635.14 $672.97 1,359.03 456.39 1,146.99 311.80 1,059.40 258.42 981.81 214.55 912.85 178.43 851.36 148.64 796.33 124.03 746.94 103.67 702.48 86.78 662.31 72.76 592.88 51.39 486.96 26.08 395.39 11.53 + + + + + + 10% 11% 12% 13% 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 || || || || || || || || || || || || || || + + + + + + + + 14% 16% 20% 25%