You own a bond that pays $100 in annual interest, with a $1000 par value. It matures in 15 years. The markets required yield to maturity in a comparable risk bond is 12%.

a. calculate the value of the bond (round to the nearest cent.)

b. how does the value change if the yield to maturity on a comparable risk bond (i) increases to 15 percent or (ii) decreases to 8 percent?

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 5 years instead of 15 years and re-calculate 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.