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Assume that coupon interest payments are made semiannually and that par value is $1,000 for both bonds. Bond A Bond B Coupon rate 4.25% 4.25%

Assume that coupon interest payments are made semiannually and that par value is $1,000 for both bonds.

Bond A Bond B
Coupon rate 4.25% 4.25%
Time to maturity 5 years 25 years
Required return 6.69% 6.69%

a. Calculate the values of Bond A and Bond B. (Round your answers to 2 decimal places.)

Bond value A $
Bond value B $

b. Recalculate the bonds values if the required rate of return changes to 8.38%. (Round your answers to 2 decimal places.)

Bond value A $
Bond value B $

c. Calculate the increase or decrease in bond value based on the change in required return. (Round your answers to 2 decimal places.)

Bond value A (Click to select) increase / decrease $
Bond value B (Click to select) increase / decrease $

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