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Consider two bonds: Bond A: 10 years to maturity; FV = 1,000; Coupon rate = 6% (annual) Bond B: 20 years to maturity; FV =

Consider two bonds:

Bond A: 10 years to maturity; FV = 1,000; Coupon rate = 6% (annual)

Bond B: 20 years to maturity; FV = 1,000; Coupon rate = 6% (annual)

  1. Assuming interest rate is 6%, calculate the price of each bond
  2. Make a table comparing the bond prices when the market interest rate changes from 0% to 20% at 1% increments
  3. Which bond is more sensitive to changes in interest rate? Explain with a graph

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