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Problem 2 Bond value and time: Changing required returns Lynn Parsons is considering investing in either of two outstanding bonds. The bonds both have $
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Bond value and time: Changing required returns Lynn Parsons is considering investing in either of two outstanding bonds. The bonds both have $ par values and coupon rates and pay annual interest. Bond A has exactly years to maturity, and bond has years to maturity.
a Calculate the value of bond if the required return is and
b Calculate the value of bond if the required return is and
c From your findings in parts a and complete the following table, and discuss the relationship between time to maturity and changing required returns.
tableRequired return,Value of bond A
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