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You are considering an 8-year, $1000.00 par value bond. The coupon rate on this bond is 9 percent and the coupons are paid semiannually. The
You are considering an 8-year, $1000.00 par value bond. The coupon rate on this bond is 9 percent and the coupons are paid semiannually. The current yield to maturity of this bond is 10 percent, however, you predict that it falls to 8 percent in the next two years. How much will the price of this bond change in the next two years if your prediction is correct?
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