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P9-18 (similar to) Question Help (Related to Checkpoint 9.3) (Bond valuation relationships) You own a...

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P9-18 (similar to) Question Help (Related to Checkpoint 9.3) (Bond valuation relationships) You own a bond that pays $120 in annual interest, with a $1,000 par value. It matures in 20 years. The market's required yield to maturity on a comparable-risk bond is 11 percent. a. Calculate the value of the bond. b. How does the value change if the yield to maturity on a comparable-risk bond (i) increases to 16 percent or (ii) decreases to 7 percent? c. Explain the implications of your answers in part b as they relate to interest-rate risk, premium bonds, and discount bonds. d. Assume that the bond matures in 3 years instead of 20 years and recalculate your answers in parts a and b. e. Explain the implications of your answers in part d as they relate to interest-rate risk, premium bonds, and discount bonds. a. What is the value of the bond if the market's required yield to maturity on a comparable-risk bond is 11 percent? $(Round to the nearest cent.) Enter your answer in the answer box and then click Check Answer. 8 parts Clear All Check Answer remaining

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