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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 $

Problem 2
Bond value and time: Changing required returns Lynn Parsons is considering investing in either of two outstanding bonds. The bonds both have $1,000 par values and 8% coupon rates and pay annual interest. Bond A has exactly 5 years to maturity, and bond B has 15 years to maturity.
a. Calculate the value of bond A if the required return is (1)8%,(2)12%, and (3)14%.
b. Calculate the value of bond B if the required return is (1)8%,(2)12%, and (3)14%.
c. From your findings in parts a and b, complete the following table, and discuss the relationship between time to maturity and changing required returns.
\table[[Required return,Value of bond A],[8%,?
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