Valuing Bonds

MM motors is selling an issue of bonds with a 10 year maturity, a $10,000 par value, an 8% coupon rate. payments of interests are to be made annually

1. what will be the price of this bond if the required rate of return is 12%
2. three years after the bonds were issued, the required rate of return fell to 8% . At what price will the bonds now sell?

one year ago Clark company issued a 10 year, 12% semi annual coupon bond at its par value of $1000. what is the value of this bond today if the required rate of return is 9%

an investors has purchased the following 5 bonds. each bond had a par value of $1000 and an 8% yield to maturity (YTM) on the day of purchase. Immediately after the investor purchased them, interests rates fell and each bond then had a new YTM of 7%

1. what is the percentage change in price of each bond after the decline in interest rates (use table below)
2. which bond is the most sensitive to the change in interest rate?

Bond Type Bond price @ 8% bond price at 7% % change

10 year, 10% coupon

10 year, zero coupon

5 year, zero coupon

30 year zero coupon

30 year, zero coupon

$100 perpetuity