omework Question 7. Problem 7-1... Save a Quiz/Test HW Score: 60%, 9 of 15 points O Points: 0 of 2 = Homework: Chapter... Part of (Bond valuation) You own a bond that pays $120 in annual interest, with a $1,000 par value. It matures in 10 years. Your required rate of return is 11 percent a. Calculate the value of the bond b. How does the value change if your required rate of rotum (1) increases to 15 percent or (2) decreases to 8 percent? c. Explain the implications of your answers in part b as they relate to interest rate risk, premium bonds, and discount bonds d. Assume that the bond matures in 5 years instead of 10 years. Recompute your answers in part e. Explain the implications of your answers in part d as they relate to interest rate risk, premium bonds, and discount bonds by contrast, an c. Based on the answers in part b, a decrease in interest rates (the required rate of return) will cause the value of a bond to increase increase in interest rates will cause the value to decrease (Select from the drop-down menus.) Also, based on the answers in part b, if the required rate of return (current interest rate) (Select from the drop-down menus) 1. Equals the coupon interest rate, the bond will sell at par 2. Exceeds the bonds coupon rate, the bond will sell at a discount 3. Is less than the bond's coupon rate, the bond will soll at a premium d. Assume the bond matures in 5 years instead of 10 years What is the value of the bond if your required rate of return is 11 percent? (Roond to the nearest cont.)