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Calculate and plot the price of a security with the following characteristics at current market interest rates of 4%, 8% and 12%; Coupon equals 8%,
Calculate and plot the price of a security with the following characteristics at current market interest rates of 4%, 8% and 12%; Coupon equals 8%, maturity equals five years, face value equals 1,000$ (Place price on the vertical (Y) axis and the current yield on the horizontal (X) axis.) Without doing the calculations, would the curve for a ten-year security be steeper or flatter than the one you have plotted? Why? What about a one-year security? Why?
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