There is a bond that pays $100 per year interest, with a $1,000 par value. It...

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There is a bond that pays $100 per year interest, with a $1,000par value. It matures in 15 years. The market required yield tomaturity on a comparable bond is 12%.
What is the value of the bond?
How does the value change if the yield to maturity on acomparable bond increase to 15%? What if it decreases to 8%.
Explain the above questions (part b) with the concepts ofinterest rate risk, premium bonds and discount bonds.
Recalculate the answer in b, with the assumption that the bondmatures in 5 years (instead of 15 years).
Explain the above questions (part d) with the concepts ofinterest rate risk, premium bonds and discount bonds.
Clearly show which EQUATIONS could be used to solve theproblem mathematically
Indicate the detailed steps on how to use FINANCIALCALCULATOR or Equations from the Textbook to solve theproblems.

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Q 1 If yield to maturity is 12 Value of bond Present value of interest on bond Present value of principal on bond 100 Cumulative present value factors for 15 years at 12 1000 11215 100 See Answer

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There is a bond that pays $100 per year interest, with a $1,000par value. It matures in 15 years. The market required yield tomaturity on a comparable bond is 12%.What is the value of the bond?How does the value change if the yield to maturity on acomparable bond increase to 15%? What if it decreases to 8%.Explain the above questions (part b) with the concepts ofinterest rate risk, premium bonds and discount bonds.Recalculate the answer in b, with the assumption that the bondmatures in 5 years (instead of 15 years).Explain the above questions (part d) with the concepts ofinterest rate risk, premium bonds and discount bonds.Clearly show which EQUATIONS could be used to solve theproblem mathematicallyIndicate the detailed steps on how to use FINANCIALCALCULATOR or Equations from the Textbook to solve theproblems.