Question: Assuming that the current interest rate is 3 percent, compute the present value of a five-year, 5 percent coupon bond with a face value of

Assuming that the current interest rate is 3 percent, compute the present value of a five-year, 5 percent coupon bond with a face value of $1,000. What happens when the interest rate goes to 4 percent? What happens when the interest rate goes to 2 percent?

Instructions: Enter your responses rounded to the nearest penny (two decimal places). Do not round intermediate calculations.

PV at an interest rate of 3% = $

PV at an interest rate of 4% = $

The present value (Click to select) falls rises when the interest rate rises to 4 percent.

Selection are fall or rises

PV at an interest rate of 2% = $

The present value (Click to select) rises falls when the interest rate falls to 2 percent.

Selection are fall or rises

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