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Q6 Please show all work or excel functions. Thanks! On May 30, 2015, J Kerr is considering the newly issued 10-yr AA corporate bonds shown

Q6 Please show all work or excel functions. Thanks!

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On May 30, 2015, J Kerr is considering the newly issued 10-yr AA corporate bonds shown below: Coupon Price Callable Call price Sentinal, due May 30 2025 Colina, due May 30 2025 4.0% 100 N/A Currently callable 4.2% 100 102 Suppose that market interest rates decline by 100 bps [12]. Contrast the effect of this decline on the price of each bond. BE DETAILED IN YOUR COMMENTS b Should Kerr prefer the Colina over the Sentinal bond when rates are expected to rise or to fall? BE DETAILED IN YOUR COMMENTS

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