You own a bond that pays $100 in annual interest, with a $1000 par value. It matures in 20 years. The market's required yield to maturity on a comparable-risk bond is 11 percent.

A. Calculate the value of the bond.

B. How does the value change if the yield to maturity on a comparable-risk bond (i)increase to 14% or (ii) decreases to 6%?

C. Explain the implications of your answers in part b as they relate to interest rate risk, premium bonds, and discount bonds.

D. Assume that the bond matures in 4 years instead of 20 years and recalculate your answers in parts a and b.

E. Explain the implications of your answers in part d as they relate to interest-rate risk, premium bonds, and discount bonds.