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You own a bond that pays $50 in annual coupon payments, with a $1000 par value. It matures in 20 years. Your required rate of

You own a bond that pays $50 in annual coupon payments, with a $1000 par value. It matures in 20 years. Your required rate of return is 8%.

Calculate the value of the bond. (4 marks) Calculate the value of the bond if your required rate of return:

decreases by 2%

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