Question: A bond has the following terms:
Principal amount $1,000
Semi-annual interest $50
Maturity 10 years
Q1. What is the bond's price if comparable debt yields 12%?
Q2. What is the current yields and yields to maturity?
Q3. What would be the bond's price if interest rates declined to 8%
Q4. What two generalizations may be drawn from the above price changes? In other words,
Q5. Explain the relationship in the above example between interest rates (at 12% vs 8%) And the price of the bond.