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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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