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The Sheridan Department of Transportation has issued 25-year bonds that make semiannual coupon payments at a rate of 10.325 percent. The current market rate for
The Sheridan Department of Transportation has issued 25-year bonds that make semiannual coupon payments at a rate of 10.325 percent. The current market rate for similar securities is 11.8 percent. Assume that the face value of the bond is $1,000.
Suppose the bond were to mature in 12 years. What will be the bonds price if rates in the market
(i) decrease to 9.80 percent or
(ii) increase to 12.8 percent?
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