5-1. The Altoona Company issued a 25-year bond 5 years ago with a face value of $1,000. The bond pays

5-1. The Altoona Company issued a 25-year bond 5 years ago with a face value of $1,000.  The bond pays interest semiannually at a 10% annual rate. 

a. What is the bond's price today if the interest rate on comparable new issues is 12%?

b. What is the price today if the interest rate is 8%?

c. What is the price today if the interest rate is 10%? 

d. Calculate the current yields for parts a, b, and c.

e. Explain the results of parts a and b in terms of opportunities available to investors.

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