A bond issued by the Harris Corporation has a coupon rate of 7 1/2 percent. It matures in 2035.
a. If you require an 8 percent rate of return for a bond of this type, what is the maximum price you are willing to pay?
b. What would be the maximum price that you would be willing to buy it at if the required rate of return was 11 percent? Was 6 percent? What is the percent change in price given the changes in interest rates?