Question: Answer these questions and show your work: 1. Assume that the company that you selected for the Module 1 SLP has a bond outstanding that

Answer these questions and show your work:
1. Assume that the company that you selected for the Module 1 SLP has a bond outstanding that matures in 20 years and has a rate of 6.5%. The of the bond is $1,000.
2. If the yield to is 8% and the bond pays interest on an annual basis, what's the current price of the bond? Is the bond selling for a premium or discount? How can you tell?
3. Now, assume that the economy enters into a recession and interest rates fall. The bond's yield to is now 5%. What's the bond's new price? How does the price compare with your answer in part a? Why did the bond's value change?

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