8. The yield to maturity for 15year bonds is as follows for four different bond rating categories.

AAA	6.4%	A	7.0%
AA	6.6	BBB	7.2

The bonds of Falter Corporation were rated as AA and issued at par a few weeks ago. The bonds have just been downgraded to A. Determine the new price of the bonds, assuming a 15year maturity and semiannual interest payments.

1. 17. A $1,000 par value bond was issued 25 years ago at an 8 percent coupon rate. It currently has 15 years remaining to maturity. Interest rates on similar debt obligations are now 14 percent.
   1. Compute the current price of the bond using an assumption of semiannual payments.

2. If Mr. Mitchell initially bought the bond at par value, what is his percentage loss (or gain)?

3. Now assume Mrs. Gordon buys the bond at its current market value and holds it to maturity; what will be her percentage return?

4. Although the same dollar amounts are involved in parts b and c, explain why the percentage gain is larger than the percentage loss.