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Calculate the value of the bond

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Reference no: EM133152304

Question - Sterling Corporation issued a bond with a par value of $1000 and a coupon rate of 8%. It matures in 20 years. The required yield to maturity on a comparable risk bond is 7%.

Required -

i) Calculate the value of the bond.

ii) If the required yield to maturity on a comparable risk bond Increases to 10%.

iii) Decreases to 6%.

iv) Explain the implications of b) above in relation to bond prices and interest rate risk.

Reference no: EM133152304

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