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Term: 3 years Payment: 175 Face Value: 500 Currently the prevailing risk free rate is 0.01 and the market places a risk premium on XYZ.inc

Term: 3 years Payment: 175 Face Value: 500

Currently the prevailing risk free rate is 0.01 and the market places a risk premium on XYZ.inc bonds of 0.10

Suppose the risk free rate decreases by 0.05

1. Compute the coupon rate of this bond.

2.Compute the present value of an XYZ.inc bond?

3. Compute the change in the bond price.

4.Compute the Yield to Maturity of this bond.

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