You have been given the following information for an existing bond that provides coupon payments.

Par Value: $2000

Coupon rate: 6%

Maturity: 4 years

Required rate of return: 6%.

1. What is the Present Value (PV) of the bond?

2. If the required rate of return by investors were 11% instead of 6%, what would the Present Value of the bond be?

3. Look at the same Par Value $2,000 Same Coupon rate: 6% Maturity: 10 years Required rate of return: 7%

What is the Present Value of the Bond now? Explain how the longer maturities and higher required rate of return by investors affects the bond valuation.