Suppose there are two bonds you are considering:

	Bond A	Bond B
Maturity (years)	6	5
Annual Coupon rate (%)	6	8
Par Value	1000	1000

1. If both bonds had a required rate of return of 4%, what would the bonds prices be?
2. Re-calculate the prices of the bonds if the required return falls to 9%. Could you explain why the price increases or decreases given this change in required return?
3. After one year the required return is 5%, recalculate de new prices for both bonds and find the return that the investors had for bond A and for Bond B.