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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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