Textbook Problems 1. New South Wales Treasury has issued $1,000 face value, 25-year bonds that pay semi annual coupons at a rate of 9.875 per cent. The market interest rates increased sharply just after the issue and the current market rate for similar bonds is 11 per cent. What would be the bond's current market value (price)? a. b. What would be the bond's price if rates in the market (i) decrease to 9 per cent; (ii) increase to 12 per cent? What happens to the bond price when market interest rate changes? Suppose the bond were to mature in 12 years. How do the interest rate changes in part b affect the bond prices? c. d