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An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 10.50% annual coupon. Bond Alpha matures in
An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 10.50% annual coupon. Bond Alpha matures in 5 years, while Bond Beta matures in 1 year. a) What will the value of each bond be if the going interest rate is 20%? b) Which bond will have the greater percentage change in price if interest rates increase by 1 percentage point?
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