Compute the current price of bond a

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Bond A is a 6% coupon(paid semi-annually) 12 year bond with a face value of $100

Bond B is a 4% coupon(paid semi-annually) 12 year bond with a face value of $100

Bond C is a 5% coupon(paid semi-annually) 3 year bond with a face value of $100

The yield curve is flat at 8% per annum

i) Compute the current price of bond A, B and C

ii) Compute the new price of bond A if the yield curve falls to 5% and if the yield curve jumps to 9%

iii) Compute the new price of bond B if the yield curve falls to 3%. What is the percentage price change?

iv) Compute the new price of bond C if the yield curve falls to 4%. What is the percentage price change?

Reference no: EM133114325

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