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Effects of the changes of market interest rate

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Consider two bonds X and Y. The coupon rates are 10% and the face values are TK.maturity. 2000 for both bonds. Bond X has 12 years maturity while bond Y has 10 years to

a. What are the prices of the two bonds if the market interest rate for both bonds is 10%

b. If the market interest rate increases to 14%, what will be the prices of the two bonds?

c. If the market interest rate decreases to 9%, what will be the prices of the two bonds?

Describe the effects of the changes of market interest rate on the values of the two bonds.

Reference no: EM132618671

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