Consider a 12-year, 12 percent annual coupon bond with a required rate of return of 10 percent.

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Consider a 12-year, 12 percent annual coupon bond with a required rate of return of 10 percent. The bond has a face value of $1,000. (LG 3-4)

a. What is the fair present value of the bond?

b. If the required rate of return rises to 11 percent, what is the fair present value of the bond?

c. What has been the percentage change in the fair present value?

d. Repeat parts (a), (b), and

(c) for a 16-year bond.

e. What do the respective changes in bond values indicate?

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Financial Markets And Institutions

ISBN: 9781259919718

7th Edition

Authors: Anthony Saunders, Marcia Cornett

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Question Posted: Jul 24, 2024 12:02 PM

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Consider a 12-year, 12 percent annual coupon bond with a required rate of return of 10 percent.

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Financial Markets And Institutions

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