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Find the value of a bond that pays a coupon of annually

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Reference no: EM132805953

problem 1: Find the value of a bond that pays a coupon of 4% annually, semi-annually and has a time to maturity of 14 years. At this time, the market interest rate or expected return (YTM - yield to maturity) is 5% per annum APR (annual, compounded semi-annually).

problem 2: If the market rate drops to 4% APR, then what would the price be?

problem 3: If the market rate drops to 3% APR, then what would the price be?

problem 4: What behavior of the bond value can you observe when the market rate drops from 3% APR to 3% APR?

Reference no: EM132805953

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