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Two bonds offer a 5% coupon rate, paid annually, and sell at par ($1,000). One bond matures in two years and the other matures in

Two bonds offer a 5% coupon rate, paid annually, and sell at par ($1,000). One bond matures in two years and the other matures in ten years.

a. What are the YTMs on each bond?

b. If the YTM changes to 4%, then what happens to the price of each bond?

c. What happens if the YTM changes to 6%?

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