(Solved): A $1,000 par value bond was issued 25 years ago at an 8 percent coupon rate. It currently has 10 ye ...

A $\$1,000$ par value bond was issued 25 years ago at an 8 percent coupon rate. It currently has 10 years remaining to maturity. Interest rates on similar debt obligations are now 16 percent. (Use a Financial calculator to arrive at the answers. Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. Compute the current price of the bond using an assumption of semiannual payments. Price of the bond $\$$ b. If Mr. Mitchell initially bought the bond at par value, what is his percentage loss (or gain)? (Input the amount as positive value.) $\%$ c. Now assume Mrs. Gordon buys the bond at its current market value and holds it to maturity, what will her percentage return be? (Input the amount as positive value.) $\%$ d. Although the same dollar amounts are involved in parts $b$ and $c$, explain why the percentage gain is larger than the percentage loss. Investment is larger Investment is smaller