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Bond A has the following terms: Coupon rate = 10% Principal = $1,000 Term to maturity = 8 years Bond B has the following terms:
Bond A has the following terms:
- Coupon rate = 10%
- Principal = $1,000
- Term to maturity = 8 years
Bond B has the following terms:
- Coupon rate = 5%
- Principal = $1,000
- Term to maturity = 8 years
a) What should be the price of each bond if the interest rate is 10%
b) What will be the price of each after 5 years if the interest rate is 10%
c) What will be the price of each if after 8 years, the interest rate is 8%?
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