1. Solve the problems using the formulas below.

Current rate = coupon payment/current price

Current price = coupon payment/current rate

You purchased a bond at par value that has a coupon rate (%) of 4%. New bonds were recently issued at 3%. You need to sell your bond. What is the new price of your bond? Why did the price change?

You bought a bond for $975 with a coupon of 6%. Your bond is now worth $875. What is the current rate?

please show step-by-step work. Thank you