A $1,000, 10-yr bond with a 6.0% coupon rate is `selling at par value. If the interest payments are made quarterly.

a) How much are the interest (coupon) payments?

Now consider, Benjamin purchases this bond at par value...

b) If he holds it to maturity, Write the equation(s) using the factors to find the "yield" for Benjamin (NO NEED TO CALCULATE).

Now, Benjamin has decided to sell the bond after 4 years for $1,080...

c)As a result of this sale (above), Is the yield to Benjamin going to bemore than or less than 6% - Why?

d)Since Benjamin was able to sell the bond for more than its face value,which ONEof the following statements is true:

1) Market interest rates have increased since the bond was issued

2)Market interest rates have decreased since the bond was issued

3)Market interest rates have nothing to do with market value of the bond.