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Please use excel, annual coupon rate The following describes a AAA-rated Plain Vanilla...

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Accounting

Please use excel, annual coupon rate

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The following describes a AAA-rated Plain Vanilla bond with a coupon of 6%, and a maturity of 10 years from today. Question 1a: Assuming that you purchase the bond today, if the bond trades with a face value of $1000, what is the value of the bond on the secondary market at the end of year three on your timeline if interest rates for similar bonds move from 6% down to 5%? (Assume that Today = Year O on your timeline). Question 1b: Is this bond now trading at a premium, discount, or at par value? Question 2a: At the end of year seven, what would be the value of the bond if interest rates on similar bonds are now 8%? Question 2b: Is this bond now trading at a premium, discount, or at par value

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