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initial rate is 6% 5. Interest rates fall to 4%. a. What is the current price of the 2 year, 4% coupon bond? b. What
initial rate is 6%
5. Interest rates fall to 4%. a. What is the current price of the 2 year, 4% coupon bond? b. What is the current price of the 10 year, 4% coupon bond? c. Calculate the percent change in price of each bond (i.e., the 2 yr and 10 yr) due to the rate decrease 6. Now consider your responses to Question 5. Which bond was more sensitive to the change in interest rates Step by Step Solution
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