Suppose you are holding a $25,000 deep discount bond that initially had 30 years to maturity.
a. Calculate the initial and current price of this bond if 8 years later you must sell the bond and market interest rates rise from 5.51 to 7.77%.
b. Compare your actual return with the return you expected when you purchased the instrument.
c. Explain how the returns would have been different if this had been a 15 year instrument initially. Your explanation should be supported by your calculations.