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Question 11 (1 point) Consider the following figure that shows the time path of the value of a 10% coupon, $1,000 par value bond when
Question 11 (1 point) Consider the following figure that shows the time path of the value of a 10% coupon, $1,000 par value bond when interest rates are 5%, 10% and 15%. Bond Value 1,495 1, Falls and Stays at 5% To = Coupon Rate = 10% (Par Bond) M = 1,000 M 714 1. Rises and Stays at 15% 0 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 Years Remaining Until Maturity In the bonds interest rate falls below the coupon rate (such as 5% here), a fixed-rate bond's price rises above its par value. Such a bond is called a
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