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?(Bond valuation?) You own a bond that pays ?$100 in annual?interest, with a ?$1,000 par value. It matures in 20 years. Yourrequired rate of return is 12 percent.a. Calculate the value of the bond.b. How does the value change if your required rate of return?(1) increases to 14 percent or? (2) decreases to 7 ?percent?c. Explain the implications of your answers in part ?(b?) asthey relate to interest rate? risk, premium? bonds, and discountbonds.d. Assume that the bond matures in 4 years instead of 20 years.Recompute your answers in part ?(b?).e. Explain the implications of your answers in part ?(d?) asthey relate to interest rate? risk, premium? bonds, and discountbonds.
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