Question: 1. Bond Features Maturity (years) = 8 Face Value = $1,000 Starting Interest Rate 4.23% Coupon Rate = 4% Coupon dates (Annual) If interest rates

Bond Features
Maturity (years) =	8
Face Value =	$1,000
Starting Interest Rate	4.23%
Coupon Rate =	4%
Coupon dates (Annual)

If interest rates change from 4.23% to 5.02% immediately after you buy the bond today (and stay at the new interest rate), what is the price effect in year 4 ?

State your answer to the nearest penny (e.g., 48.45)

If there is a loss, state your answer with a negative sign (e.g., -52.30)

2.Assume you buy a bond with the following features Bond maturity = 4 Coupon Rate = 4% Face Value = $1,000 Annual Coupons When you buy the bond the market interest rate = 3.19% Immediately after you buy the bond the interest rate changes to 5.59% What is the "reinvestment" effect in year 3 ?

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