Question: 1a) If interest rates increase by 150 basis points (original interest rate is 8%), what is the % price change for a 1 year zero-coupon

1a) If interest rates increase by 150 basis points (original interest

1a) If interest rates increase by 150 basis points (original interest rate is 8%), what is the % price change for a 1 year zero-coupon bond with a $100 face value? b) What methods can we use to estimate the equity premium in CAPM? c) Pearson Motors has a target capital structure of 50% debt and 50% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 9%, and its tax rate is 40%. Pearson's CFO estimates that the company's WACC is 8%. What is Pearson's cost of common equity

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