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Compute the durations of the following bonds and rank them on the basis of their price volatility. Assume that the current rate of interest is
Compute the durations of the following bonds and rank them on the basis of their price volatility. Assume that the current rate of interest is 8 percent. Bond Coupon Term A 8 percent 10 years B 12 percent 10 years C 8 percent 5 years Confirm your ranking by calculating the percentage change in the price of each bond when interest rates rise from 8 to 12 percent.
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