Question: A ( $ 1 , 0 0 0 ) par value bond has a 7 percent coupon, which is paid on a

A \(\$ 1,000\) par value bond has a 7 percent coupon, which is paid on a semiannual basis. It matures in either 1 year or 15 years. Current yields on similar bonds are either 4 percent or 8 percent.
a. Calculate the price of the bond for the four possibilities.
Note: Use a Financial calculator to arrive at the answers. Do not round intermediate calculations. Round the final answers to 2 decimal places.
b. What is the relationship between price and yield?
Price and yield are Inversely related.
c. What is the relationship between bond price changes and time to maturity?
Bond prices change for a given yield change.
A \ ( \ $ 1 , 0 0 0 \ ) par value bond has a 7

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