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Suppose you want to compare the price sensitivity of two 1 0 - year bonds. Bond A Bond B Has a par value of $
Suppose you want to compare the price sensitivity of two year bonds.
Bond A
Bond B
Has a par value of $
Has a par value of $
Has a coupon rate of percent with coupon payments
Has a coupon rate of percent with coupon payments made annually. made annually.
The initial required rate of return, is percent.
The initial required rate of return, is percent.
Suppose the producer price index indicates that prices may soon decrease by as much as percent, which results in an investor's required rate of return on a bond to decrease to
Using this information, fill in the values for the percentage change in bond price, percentage change in and bond price elasticity for each bond in the table.
tableBonds:tableInitial Price of Bonds when
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