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QUESTION 16 A Pepsi bond is currently traded at the market. It has eight years until maturity and pays no coupon. It offers an interest

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QUESTION 16 A Pepsi bond is currently traded at the market. It has eight years until maturity and pays no coupon. It offers an interest rate of 6% p.a. (compounded yearly). If the prevailing interest rate is expected to decrease by 0.1%, how will this change the value of the zero coupon bond one year later? Assume face value of $1000. Please round your answer to two decimal places. a. Bond price will decrease by 2.1% b. Bond price will increase by 4.00% Bond price will increase by 2.1% d. Bond price will increase by 6.70% e Bond price will decrease by 4.00%

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