Determining Interest and Approximate Bond Value. Assume that three years ago, you purchased a corporate bond that pays 9.25 percent. The purchase price was $1,000. Also assume that three years after your bond investment, comparable bonds are paying 8.25 percent. (Obj. 2)
a. What is the annual dollar amount of interest that you receive from your bond investment?
b. Assuming that comparable bonds are paying 8.25 percent, what is the approximate dollar price for which you could sell your bond?
c. In your own words, explain why your bond increased or decreased in value.