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Bond value and time - Constant required returns Pocos Manufacturing has just issued a 15 -year, 9% coupon interest rate, 51,000 -par bond that pays
Bond value and time - Constant required returns Pocos Manufacturing has just issued a 15 -year, 9% coupon interest rate, 51,000 -par bond that pays interest aninualy. The required return is currently 17%, and the compary is certain it wil remain at 17% until the bond matures in 15 years. a. Assuming that the requred retum does remain at 17% unti matursy, find the value of the bond wath (1) 15 years, (2) 12 years, (3) 9 years, (4) 6 years, (5) 3 years, (6) 1 year to maturity b. All else equal, when the required return differs from the coupon rate and is constant to maturity, what happens to the bond value as fime passes? Explain in light of the following graph
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