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Refer to Table 10-2 (a) Assume the interest rate in the market (yield to maturity) goes down to 8 percent for the 10 percent bonds.
Refer to Table 10-2 (a) Assume the interest rate in the market (yield to maturity) goes down to 8 percent for the 10 percent bonds. Using column 2, indicate what the bond price will be with a 1-year, a 5-year, and a 10-year time period. (Round "PV Factor" to 3 decimal places, intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.) Maturity Bond price 1 Year $ 5 years 10 years (b) Assume the interest rate in the market (yield to maturity) goes up to 12 percent for the 10 percent bonds. Using column 3, indicate what the bond price will be with a 1-year, a 5-year, and a 10-year period. (Round "PV Factor" to 3 decimal places, intermediate calculations and final answers to 2 decimal places. Omit the "$" sign in your response.) Maturity Bond price 1 Year $ 5 years 10 years (c) Assume the interest rate in the market (yield to maturity) goes down to 8 percent for the 10 percent bonds. If interest rates in the market are going down, which bond would you choose to own? Shortest-term bond Longest-term bond (d) Assume the interest rate in the market (yield to maturity) goes up to 12 percent for the 10 percent bonds. If interest rates in the market are going up, which bond would you choose to own? Longest-term bond Shortest-term bond
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