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Posted on Jan 06, 2024

Bond with face value of 1000 EURO, 2 years time to maturity and 10 % coupon rate, makes semiannual coupon payments and provides 8% yield-to-maturity.

a) Calculate the price of the bond.

b) If the yield-to-maturity would increase to 9%, what will be the price of the bond? How this change in the yield-to-maturity would influence bond price?

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