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What must have happened to market interest rates

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(a) GrowthSec Ltd has raised $10M in debt funding by issuing 100 5 year bonds with a face value of $100,000 each. The bonds pay semi-annual coupons at 6% p.a. If the yield to maturity is 7% p.a., what will be the price of each bond?

(b) If after one year the bond is trading at a premium, what must have happened to market interest rates? Why has this impacted the bond price?

Reference no: EM133068630

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