The yield of the 10-year US Treasury bond is 1.20%. It is the risk-free rate. Yo

The yield of the 10-year US Treasury bond is 1.20%. It is the risk-free rate. You work
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for investment manager and your boss asks you to calculate the price of a 10-year
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corporate bond that yields 3.00% more than its risk-free rate and has a face value of
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$1,000. The fixed coupon of this corporate bond is 5.00%. Both bonds pay coupons
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annually.
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• What is the current price of the corporate bond?
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• Calculate the price of the bond if its yield increased by 1.00%.
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• Calculate the price of the bond if its yield decreased by 1.00%.
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• Please discuss the risk associated with this change in interest rates