Problem 6-19 Interest Rate Risk (LO3)

Consider three bonds with 8% coupon rates, all making annual coupon payments and all selling at a face value of $1,000. The short-term bond has a maturity of 4 years, the intermediate-term bond has maturity 8 years, and the long-term bond has maturity 30 years.

a.	What will be the price of each bond if their yields increase to 9%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

	4 Years	8 Years	30 Years
Bond price	$	$	$

b.	What will be the price of each bond if their yields decrease to 7%? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

	4 Years	8 Years	30 Years
Bond price	$	$	$