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You purchase a $1,000 bond that matures in 10 years and has a 6.5% coupon rate. If interest rates rise to 7.25% what would
You purchase a $1,000 bond that matures in 10 years and has a 6.5% coupon rate. If interest rates rise to 7.25% what would be the price of the bond? 2. Under the same example, what would be the price of the bond if there was 8 years remaining when interest rates increased to 7.25? 3. For questions 1 and 2, what is the current yield?
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SOLUTION 1 To calculate the price of the bond when interest rates rise to 725 we can use the following formula Bond price Coupon payment 1 Yield1 Coup...
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Bond Markets Analysis and Strategies
Authors: Frank J.Fabozzi
9th edition
133796779, 978-0133796773
