Consider three bonds with 5.20% coupon rates, all making annual coupon payments and all selling at...

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Finance

Consider three bonds with 5.20% coupon rates, all making annualcoupon payments and all selling at face value. The short-term bondhas a maturity of 4 years, the intermediate-term bond has amaturity of 8 years, and the long-term bond has a maturity of 30years.
a. What will be the price of the 4-year bond ifits yield increases to 6.20%?
b. What will be the price of the 8-year bond ifits yield increases to 6.20%?
c. What will be the price of the 30-year bond ifits yield increases to 6.20%?
d. What will be the price of the 4-year bond ifits yield decreases to 4.20%?
e. What will be the price of the 8-year bond ifits yield decreases to 4.20%?
f. What will be the price of the 30-year bond ifits yield decreases to 4.20%?

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4.5 Ratings (973 Votes)

Face Value 1000 Annual Coupon Rate 520 Annual Coupon 520 1000 Annual Coupon 52 Answer a Time to Maturity 4 years Annual YTM 620 Current Price 52 PVIFA620 4 1000 PVIF620 4 Current Price 52 1 110624 0062 See Answer

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