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The markets required return suddenly rises to 7 what are

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Reference no: EM13571595

You have gathered the following data on three bonds:

Bond                                       Maturity                              Coupon%

A                                             10 yrs                                    9%

B                                             9 yrs                                       1%

C                                             5 yrs                                       5%

a. If the market's required return on all three bonds is 6%, what are the market prices of the bonds (you can assume annual interest payments).

b. The market's required return suddenly rises to 7%. What are the new bonds' prices, and what is the percentage change in price for each bond?

c. If the market's required return falls from the initial ^% to 5%, what are the new prices, and what is the percentage change in each price relative to the answer obtained in part (a)?

Reference no: EM13571595

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