A bond has a face value of $1,000, a coupon rate of 8%, and matures in 6

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A bond has a face value of $1,000, a coupon rate of 8%, and matures in 6 years. Imagine that the market interest rate is 6%, but immediately after you buy the bond, the rate drops to 5%. What is the immediate effect on the price of the bond?

Hint: The effect is the price of the bond after the change minus the price of the bond before the change.

Related Book For answer-question

Introduction to Operations Research

ISBN: 978-1259162985

10th edition

Authors: Frederick S. Hillier, Gerald J. Lieberman

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Posted Date: Sep 11, 2023 03:39 AM

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A bond has a face value of $1,000, a coupon rate of 8%, and matures in 6

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When the market interest rate drops immediately after you buy the bond the price of the bond will in... View the full answer

Introduction to Operations Research

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