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(Interest-rate risk) Philadelphia Electric has many bonds trading

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(Interest-rate risk) Philadelphia Electric has many bonds trading on the New York Stock Exchange. Suppose PhilEl’s bonds have identical coupon rates of 9.125% but that one issue matures in 1 year, one in 7 years, and the third in 15 years. Assume that a coupon payment was made yesterday.
"a. If the yield to maturity for all three bonds is 8%, what is the fair price of each bond?
B. Suppose that the yield to maturity for all of these bonds changed instantaneously to 7%. What is the fair price of each bond now?
C. Suppose that the yield to maturity for all of these bonds changed instantaneously again, this time to 9%. Now what is the fair price of each bond?
d. Based on the fair prices at the various yields to maturity, is interest-rate risk the same, higher, or lower for longer-versus shorter-maturity bonds? "
Please show how you arrive at the answer manually, so I can understand the steps to calculation.

Hello snowball,

 

Please note that to type the full solutions with steps would take a very long time. I can type in steps the answers using the bond with a 1 year maturity, and provide calculator solutions to the rest (The calculations would be the same except for the number of periods), please advise if that is ok

 

Thank you

Customer: replied 6 years ago.
Sure. What I am looking for mostly is the answer to a.b.c.d., so if you type in steps to the answers using the bond with a 1 year maturity, and provide calculator solutions to the rest (The calculations would be the same except for the number of periods). would the 7yr and 15 yr work the same way?

Yes, that is correct

 

Please click here for the solutions

 

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