You Purchased a 4% coupon, $1000 par value bond. It has 8 years to maturity.
1. If the required rate of return for bonds of this risk level is 12%, how much would you pay for this bond?
2. If interest rates changed instantly to 15%, what would be the price of this bond?
3. What is the percent change in bond price?
4. What is the bond price elasticity?