Exercise $1$: Bond Variables:

Face Value $($P$)$: $$1,000$

Coupon Rate $($I$)$: $7\%(0\mathrm{.}07$ as a decimal$)$

Time to Maturity $($T$)$: $10$ years

Yield to Maturity $($Y$)$: $6\%(0\mathrm{.}06$ as a decimal$)$

Calculate the value of the bond using the bond valuation formula discussed in the reading. Show all your calculations step$-$by$-$step and provide the final bond value.

Exercise $2$: Proving the Answer Using the bond details from Exercise $1,$ prove the correctness of your calculated bond value. Calculate the present value of all future cash flows and verify if it matches the bond value. Show all your calculations step$-$by$-$step and provide a brief explanation of your results.

Exercise $3$: Interest Rate Sensitivity 

Explain how the bond value is affected when: a$)$ The coupon rate $($I$)$ increases while the yield to maturity $($Y$)$ remains the same. b$)$ The yield to maturity $($Y$)$ decreases while the coupon rate $($I$)$ remains the same.

Exercise $4$: Real$-$World Bond Example 

Research and find a real$-$world example of a bond issued by a company or government. Provide the bond details $($face value, coupon rate, time to maturity, and yield to maturity$)$ and calculate the bond value using the formula discussed in the presentation. Briefly explain the significance of this bond for the issuer and investors.