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Piotr and Pournima each buy a bond with face value $7500 and a coupon rate of 4.85%. Piotr's bond matures in 12 years, and Pournima's
Piotr and Pournima each buy a bond with face value $7500 and a coupon rate of 4.85%. Piotr's bond matures in 12 years, and Pournima's bond matures in 20 years. The current interest rate is 7.25%. a) How much does Piotr pay for his bond? b) How much does Pournima pay for her bond? c) The interest rate changes to 2.25%. Are the bonds worth more or less? d) If they both sell their bonds right away at the new interest rate from c), who makes more (or loses less) money? How much
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