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2a. Last year a firm issued 20-year, 8% annual coupon bonds at a par value of $1,000. Suppose that one year later the going market
| 2a. Last year a firm issued 20-year, 8% annual coupon bonds at a par value of $1,000. | ||||||||||||
| Suppose that one year later the going market interest rate drops to 6%. What is the new price of the bonds assuming that they now have 19 years to maturity? | ||||||||||||
| 2b. Suppose that one year after issue, the going market interest rate is 10% (rather than 6%). What would the price have been? | ||||||||||||
| Please explain your reasoning.
PLEASE SPECIFY HOW TO PUT THE VALUES IN THE CALCULATOR | ||||||||||||
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Contemporary Quantitative Finance
Authors: Carl Chiarella, Alexander Novikov
2010th Edition
3642034780, 978-3642034787
