Relationship is between interest rates and bond prices

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1. Discuss how bond prices are determined in the market, what the relationship is between interest rates and bond prices, and how a bond's price changes over time as it approaches maturity.

2. Andrew Corporation has a level-coupon bond outstanding that pays coupon interest of $120 per year and has 10 years to maturity. The face value of the bond is $1,000. If the yield for similar bonds is currently 15%, what is the bond's current market value?

3. Although appealing to more refined tastes, art as a collectible has not always performed so profitably. Assume that in 2015, an auction house sold a statute at auction for a price of $10,689,500. Unfortunately for the previous owner, he had purchased it in 2009 at a price of $12,719,500. What was his annual rate of return on this sculpture?

Reference no: EM131985665

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