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Consider a 30-year bond that has a face value of $10,000 and a coupon rate of 9% with quarterly coupon payments. The yield to maturity
Consider a 30-year bond that has a face value of $10,000 and a coupon rate of 9% with quarterly coupon payments. The yield to maturity (YTM) of the bond is 11%.
a. What is the maximum price would you be willing to pay for this bond right now?
b. What is the maximum price would you be willing to pay for this bond right after its 14th coupon payment?
c. What is the maximum price would you be willing to pay for this bond right after its 14th coupon payment if YTM at the time is expected to be 4%?
a. What is the maximum price would you be willing to pay for this bond right now?
b. What is the maximum price would you be willing to pay for this bond right after its 14th coupon payment?
c. What is the maximum price would you be willing to pay for this bond right after its 14th coupon payment if YTM at the time is expected to be 4%?
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