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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
You have gathered the following data on three bonds
Bond A with maturity of 10 years and a 9% coupon
Bond B with maturity of 9 yrs and a 1% coupon
Bond C with a maturity of 5 yrs and a 5% coupon
a. If the markets required return on all three bonds is 6%, what are the market prices of the bonds (you can assume annual interest payments)
b. the markets 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 6% to 5%, what are the new prices and what is the percentage change in each price relative to the answer obtained in part (a)?
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