What will be the price of each bond-explain the price

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Reference no: EM131182064

Consider two 12% (coupon rate) $100 (face value) government bonds that differ only in that one matures in 2 years’ time and the other in 5 years’ time. Both bonds pay coupon annually.

1) What will be the price of each bond, given the required yield is 10% per annum?

2) What will be the price of each bond, given the required yield is 14% per annum?

3) Explain the price.

Reference no: EM131182064

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