A 4- year 5.8% coupon bond with $100 par value is selling to yield 7%. The bond pays interest annually. One year later interest rates decrease from 7% to 6.2%.

a) What is the price of the 4-year 5.8% coupon bond selling to yield 7%?

b) What is the price of this bond one year later assuming the yield is unchanged at 7%?

c) What is the price of this bond one year later id instead of the yield being unchanged the yield decreases to 6.2%?

d) Compute the following:

i. Price change attributable to moving maturity (no change in discount rate).

ii. Price change attributable to decrease in the discount rate from 7% to 6.2%.

iii. Total change in the price of this bond