1) Swanson Inc bonds have a 12% coupon rate with semi-annual coupon payments. they have 22 years to maturity and a par value of $1,000.
a) Compute the value of Swanson bonds if your required rate of return is 10%.
b) Suppose you decide to buy the bond, and immediately afterwards interest rates drop to 9.5%. How much value has the bond gained or lost?