Question: consider two 12 per cent $100 government bonds that differ only in that one matures in 2 years' time and the other in 5 years'

consider two 12 per cent $100 government bonds that differ only in that one matures in 2 years' time and the other in 5 years' time. both bonds are currently selling for

$100 and pay coupon interest annually. what will be the price of each bond, given an immediate fall in the required yield to 10 per cent per annum?

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