Question
Consider a 12-year, 12 percent annual coupon bond with a required return of 10 percent.The bond has a face value of $1,000. a)What is the
Consider a 12-year, 12 percent annual coupon bond with a required return of 10 percent.The bond has a face value of $1,000.
a)What is the price of the bond? If interest rates rise to 11 percent, what is the price of the bond? What has been the percentage change in price?
b)Repeat part (a) for a 16-year bond.
c)What do the respective changes in bond prices indicate?
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Cost management a strategic approach
Authors: Edward J. Blocher, David E. Stout, Gary Cokins
5th edition
978-0073526942
