You have gathered the following data on three bonds:
Bond Maturity Coupon%
A 10 yrs 9%
B 9 yrs 1%
C 5 yrs 5%
a. If the market's required return on all three bonds is 6%, what are the market prices of the bonds (you can assume annual interest payments).
b. The market's required return suddenly rises to 7%. What are the new bonds' prices, and what is the percentage change in price for each bond?
c. If the market's required return falls from the initial ^% to 5%, what are the new prices, and what is the percentage change in each price relative to the answer obtained in part (a)?