Bond valuation? relationships

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Reference no: EM131875878

?(Bond valuation? relationships) You own a bond that pays $110 in annual? interest, with a $1000 par value. It matures in 15 years. The? market's required yield to maturity on a? comparable-risk bond is 12 percent.

a. Calculate the value of the bond.

b. How does the value change if the yield to maturity on a? comparable-risk bond? (i) increases to 15 percent or? (ii) decreases to 6 ?percent?

c. Explain the implications of your answers in part b as they relate to? interest-rate risk, premium? bonds, and discount bonds.

d. Assume that the bond matures in 4 years instead of 15 years and recalculate your answers in parts a and b.

e. Explain the implications of your answers in part d as they relate to? interest-rate risk, premium? bonds, and discount bonds.

Reference no: EM131875878

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