Here are data on

$$$$1$ comma $0001,000$

par value bonds issued by$$ Microsoft, GE$$ Capital, and Morgan Stanley. Assume you are thinking about buying these bonds. Answer the following$$ questions:

a$.$ Assuming interest is paid$$ annually, calculate the values of the bonds if your required rates of return are as$$ follows: Microsoft,

$33$

$$percent; GE$$ Capital,

$7\mathrm{.}57\mathrm{.}5$

$$percent; and Morgan$$ Stanley,

$10\mathrm{.}510\mathrm{.}5$

$$percent; where:

LOADING...

$.$

b$.$ The bonds are selling for the following$$ amounts:

Microsoft$$

$$$$1$ comma $4111,411$

GE Capital $$

$$$$734734$

Morgan Stanley

$$$$805805$

What are the expected rates of return for each$$ bond?

c$.$ How would the value of the bonds change if$(1)$ your required rate of return

$($r Subscript brb$)$

increased

$22$

percentage points or$(2)$ decreased

$22$

percentage$$ points?

d$.$ Explain the implications of your answers in part c in terms of interest rate$$ risk, premium$$ bonds, and discount bonds.

e$.$ Should you buy the$$ bonds? Explain.