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Fabian has a 6-year, 8% annual coupon bond with a $1,000 par value. Feaster Enterprises has a 12-year, 8% annual coupon bond with a $1,000
Fabian has a 6-year, 8% annual coupon bond with a $1,000 par value. Feaster Enterprises has a 12-year, 8% annual coupon bond with a $1,000 par value. Both bonds currently have a yield to maturity of 6%. Which of the following statements are correct if the market yield increases to 7%? a. Both bonds will decrease in value by 4.61%. b. The Feaster bond will increase in value by $88.25. c. The Fabian bond will increase in value by 4.61%. d. The Feaster bond will decrease in value by 7.56%.
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