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Perform instant experiments on whether changing various inputs causes an increase or decrease in the Bond Price and by how much.(18 points) (A) What happens
- Perform instant experiments on whether changing various inputs causes an increase or decrease in the Bond Price and by how much.(18 points)
- (A) What happens when the annual coupon rate is increased?
- (B) What happens when the yield to maturity is increased?
- (C) What happens when the number of payments / year is increased?
- (D) What happens when the face value is increased?
- (E) What is the relationship between the price of a par bond and time to maturity? Try this question both when the YTM = coupon rate, and whenYTM coupon rate, and see the differences.
- (F) What happens when the annual coupon rate is increased to the point that it equals the yield to maturity? What happens when it is increased further?
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