Using excel, find the price of a 20-year $2000 par bond with 6% annual coupons for yield rates starting at 0 and increasing by .001 (.1%) until .15 (15%). Graph the bond prices (price on the y-axis and yield on the x-axis). Answer the following questions:

1. Describe your graph. What happens to bond prices when rates increase?
2. At what rate does the bond sell for par? (When is the price $2000)?
3. At what rates is the bond selling for a discount? Why is this happening?
4. At what rates is the bond selling at a premium? Why is this happening?