Problem
Consider a 12-year, 12 percent annual coupon bond with a required return of 10 percent. The bond has a face value of $1,000.
a. What is the price of the bond?
b. If interest rates rise to 11 percent, what is the price of the bond?
c. What has been the percentage change in price?
d. Repeat parts (a), (b), and (c) for a 16-year bond. What do the respective changes in bond prices indicate?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.