Sheet1a)Settlement Date01/01/00Maturity Date01/01/10Coupon Rate10.00%Yield to Maturity12.00%Redemption Value (% of par)100Number of Payments2Price (% of par)88.5300787814Price$885.30b)Settlement Date01/01/00Maturity Date01/01/05Coupon Rate10.00%Yield to Maturity12.00%Redemption Value (% of par)100Number of Payments2Price (% of par)92.6399129486Price$926.40c)Coupon Payment$50Current Yield for a5.6%Current Yield for b5.4%d-1)Settlement Date01/01/00Maturity Date01/01/10Coupon Rate10.00%Yield to Maturity8.00%Redemption Value (% of par)100Number of Payments2Price (% of par)113.590326345Price$1,135.90d-2)Settlement Date01/01/00Maturity Date01/01/05Coupon Rate10.00%Yield to Maturity8.00%Redemption Value (% of par)100Number of Payments2Price (% of par)108.1108957794Price$1,081.11e)Coupon Payment$50Current Yield for d-14.4%Current Yield for d-24.6%f)

bond has the following terms: Principal amount $1,000 Semi-annual interest $50 Maturity 10 years (When asked for a % yield, round yields to nearest tenth of a percent, such as 10.1 %.) a. What is the bond's price if comparable debt yields 12%? b. What would be the price if comparable debt yields 12% and the bond matures after 5 years? c. What are the current yields and yields to maturity if a. and b.? d. What would be the bond's price in a. if interest rates declined to 8%? What if the bond matures after 5 years? e. What are the current yields and yields to maturity in d.? f. What two generalizations may be drawn from the above price changes?1) There is an invesre relationship between interest rates (YTM) and the price of the bond; the higher the YTM, the lower the price of the bond, and the lower the YTM, the higher the price of the bond.

2) All things equal, the longer the time to maturity, the greater the interest rate risk

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