Show your work in the space provided (or the back of the page), and write your answers in the blank. Suppose the interest rate on a SI0,000 (face value) bond is 7.5% per annum: and suppose the bond has two years to maturity; and suppose the discount rate is 8.25%. Calculate the bond price. 1. Price = 2. Now, suppose that for some reason you learn the default risk on this bond has increased. As a result the price of the bond will (just, mark an "X" in the appropriate blank): Increase Decrease Remain unchanged True or False (1 point each) - State whether you think the following statement is tine or false. If it is false, then write "False", and in the space provided explain why it is false. For a true statement, simply write "True". Note: Information in bold may be taken as true. You are only asked to evaluate the rest of the statement. Also, note that if any part of a statement is false, then the whole thing is false. Typically, yields on U.S. Treasuries are among the lowest in the bond market. One key reason for this is because holders of U.S. Treasuries are not exposed to inflation risk. The long-run average annual compounded rate of return on a diversified portfolio of U.S. stocks is more than two percentage points higher than the long-run average annual compounded rate of return on a diversified portfolio of U.S. corporate bonds or U.S. Treasuries, and the primary explanation for this discrepancy is the greater risk associated with stocks relative to bonds. According to the efficient markets hypothesis, at any moment in time, the market price is the best estimate of the company's value based on all publicly available information