Assume a bond with the following data: a coupon rate of 8%, maturity of ten years, making
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Assume a bond with the following data: a coupon rate of 8%, maturity of ten years, making semiannual payments.
a. Calculate the value of the bond one year later, assuming market interest rates fall to 6%.
b. Calculate the value of the bond two years later after the bond was issued, assuming market interest rates rise to 8%.
c. Illustrate these results with a graph.
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