Assume interest rates in the market (yield to maturity) are 7 percent for 20 years on a

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Assume interest rates in the market (yield to maturity) are 7 percent for 20 years on a bond paying 10 percent.

a. What is the price of the bond? Bond price

b. Assume 5 years have passed and interest rates in the market have gone up to 12 percent. what is the price of the bond?

c. What would your percentage return be if you bought the bonds when interest rates in the market were 7 percent for 20 years and sold them 5 years later when interest rates were 12 percent?

Related Book For answer-question

Foundations of Financial Management

ISBN: 978-1259194078

15th edition

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen

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Posted Date: Jun 16, 2022 12:27 AM

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Assume interest rates in the market (yield to maturity) are 7 percent for 20 years on a

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Foundations of Financial Management

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