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What you would actually be willing to pay for the bond

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Reference no: EM131635359

Question: Imagine that a $10,000 ten-year bond was issued at an interest rate of 6%. You are thinking about buying this bond one year before the end of the ten years, but interest rates are now 9%.

a. Given the change in interest rates, would you expect to pay more or less than $10,000 for the bond?

b. Calculate what you would actually be willing to pay for this bond.

Reference no: EM131635359

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