You hold a 25 year bond from Telus with a par value of $1,000 and a coupon rate of $70 (7%) a year. This bond is currently selling for $1,023. (No calculations are needed in this question).

(a). What do you know about the yield of this bond? Explain.

(b). If Telus incurred a large amount of debt what would likely happen to the:

i. coupon rate on your Telus bond - explain

ii. Yield to maturity on your Telus bond - explain

iii. Your Telus bond price - explain

(c). If the Government of Canada suddenly increased interest rates on their bonds what would happen to the:

i. coupon rate on your Telus bond - explain

ii. Yield to maturity on your Telus bond - explain

iii. Your Telus bond price - explain