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4.2 Johnson Ltd. has two bond issues outstanding, called Series A and Series B: Serie A Serie B 5% Annual coupon rate Par value $
4.2 Johnson Ltd. has two bond issues outstanding, called Series A and Series B: Serie A Serie B 5% Annual coupon rate Par value $ 1,000 $ 10 5% 1,000 3 Maturity (in years) a) Calculate the value of each of these bonds when the required return (or: yield) is 7 percent annual b) Calculate the value of each of these bonds when the required return (or: yield) is 3 percent annual c) Explain why the longer-term (10-year) bond fluctuates more when interest rates change than does the shorter-term (3-year) bond
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