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Problem 10-2 Determining Interest and Approximate Bond Value [LO2] Assume that three years ago, you purchased a 10 -year corporate bond that pays 8.0 percent.
Problem 10-2 Determining Interest and Approximate Bond Value [LO2] Assume that three years ago, you purchased a 10 -year corporate bond that pays 8.0 percent. The purchase price was $1,000. Also, assume that today comparable bonds are paying 7.0 percent. a) What is the annual dollar amount of interest that you receive from your bond investment? (Omit the "\$" sign in your response.) Amount of interest $ b) Assuming that comparable bonds are paying 7.0 percent, what is the approximate market price for which you could sell your bond? (Round your answer to 2 decimal places. Omit the "\$" sign in your response.) Market price $ c-1) Did the bond increase or decrease in value? Increased in value. Decreased in value. c-2) Why did the bond increase or decrease in value? Because market rates increased. Because market rates decreased
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