Assume the following information for an existing bond that provides annual coupon payments:
Par value = $1,000
Coupon rate = 11%
Maturity = 4 years
Required rate of return by investors = 11%
a. What is the present value of the bond?
b. If the required rate of return by investors were 9 percent, what would be the present value of the bond?
c. What is the present value of the bond if it now becomes a zero coupon bond (does not coupon) and the discount rate were 14 percent instead of 11 percent?