Question: #1 (25 points) A firm issues a bond with face value $1000, a coupon rate of 5% (paid semi-annually) and with 20 years to maturity

#1 (25 points) A firm issues a bond with face value

#1 (25 points) A firm issues a bond with face value $1000, a coupon rate of 5% (paid semi-annually) and with 20 years to maturity a. Find the price of the bond if the market rate of interest is 6% (8 points) b. Find the price of the bond if the market rate of interest is 4%. (8 points) c. What market rate of interest would make the bond's value equal to $1000? (5 points) d. Is there a negative relationship between interest rates and market values? (4 points)

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