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| Teaching Since: | May 2017 |
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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
In September 2014 you are considering buying a government bond. In your system you see a government bond that expires in September 2024. The annual coupon rate is 5 percent. The principal is EUR 1,000. Interest is paid each March and September. The market interest rate is 3 percent per year.
a) What is the present value of the bond?
b) If the market interest rate unexpectedly increases, what effect would you expect this increase to have on the price of the bond?
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