A $$1,000$ par value bond was issued $25$ years ago at an $8$ percent coupon rate. It currently has $15$ years remaining to maturity. Interest rates on similar debt obligations are now $14$ percent. $($Use a Financial calculator to arrive at the answers. Do not round intermediate calculations. Round the final answers to $2$ decimal places.$)$

a$.$ Compute the current price of the bond using an assumption of semiannual payments.

Price of the bond $

b$.$ If Mr$.$ Mitchell initially bought the bond at par value, what is his percentage loss $($or gain$)?($Input the amount as positive value.$)$

Percentage $($loss$/$gain$)\%$

c$.$ Now assume Mrs$.$ Gordon buys the bond at its current market value and holds it to maturity, what will her percentage return be$?($Input the amount as positive value.$)$

Percentage $($loss$/$gain$)\%$

d$.$ Although the same dollar amounts are involved in part b and c$,$ explain why the percentage gain is larger than the percentage loss.

multiple choice

Investment is larger

Investment is smaller