Question: 1. 7. (Appendix A1 ) Suppose that you have a bond with a face value of 200 and coupon amount of 10 that matures one

1. 7. (Appendix A1

) Suppose that you have a bond with a face value of €200 and coupon amount of €10 that matures one year from now.

a. If the going interest rate is 3 percent, how much can you sell it for today?

b. If the going interest rate is 8 percent, how much can you sell it for today?

c. What does this illustrate about bond prices and interest rates?

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