How will it impact the market price of a bond

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Question - Please answer the following two questions:

a) If the market interest rate decreases, how will it impact the market price of a bond?

b) Do long-term bonds have higher price risk than short-term bonds? Please illustrate your point by comparing the price change of a 1-year bond vs. a 10-year bond due to interest rate changes. Assume both bonds have $1000 par and $100 annual coupon payment.

Reference no: EM132905974

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