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Part III: Pricing Debt 1. A bond was issued with a coupon rate of 2.5%, a face value of $1,000 and a maturity of 20 years. The expected market rate for bonds similar to that bond has held consistent at 2.5%, the same as the coupon rate. Should we expect this bond to sell for 1) par, 2) a premium, 3) or a discount and why? 2. A bond was issued with a coupon rate of 2.5%, a face value of $1,000 and a maturity of 20 years. The expected market rate for bonds similar to that bond has increased 50 basis points to 3.0%. Should we expect this bond to sell for 1) par, 2) a premium, 3) or a discount and why? 3. A bond was issued with a coupon rate of 2.5%, a face value of $1,000 and a maturity of 20 years. The expected market rate for bonds similar to that bond has decreased 50 basis points to 2.0%. Should we expect this bond to sell for 1) par, 2) a premium, 3) or a discount and why? 4. Find the expected price (present value) of an annuity that pays $500 per year for 10 years with a 7% discount rate