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What is the price you are willing to pay for this bond

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Reference no: EM133151804

Question - You purchase a 25-year bond with face value of $1,000 and the coupon rate is 5% paid semi-annually. The required rate of return on this bond is is 6%.

Required -

a. What is the price you are willing to pay for this bond?

b. Compared to a 25-year zero coupon bond with face value of $1,000, which one has a higher interest rate risk? Why?

Reference no: EM133151804

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