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Carlton Inc, has two bonds on the market: Both bonds carry annual coupon rate of 9%. However, one bond matures in four years and another

Carlton Inc, has two bonds on the market: Both bonds carry annual coupon rate of 9%. However, one bond matures in four years and another bond has eight years till maturity.

A) What is its price if its interest rate (YTM) is 9%?

b.) What happens to the prices of the bonds when the interest rate (YTM) increases to 12%?

C.) What happens to the prices of the bonds when the interest rate (YTM) drops to 8%?

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