Assume a $100 face value of abond with a cupon rate of 4%/ yr. and 8 years remainning to maturity. The prevailing interest rate is %10 .
(a) what is the price of the bond?
(b) Assume the bond is selling at $63. Whats the yield to maturity?
(c) does a change in interest rate have any effect on the bond price ? Explain what the effect is , if any , and why?