Consider two bonds, a 3-year bond paying an annual coupon of 6%, and a 20-year bond, also

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Consider two bonds, a 3-year bond paying an annual coupon of 6%, and a 20-year bond, also with an annual coupon of 6%. Both bonds currently sell at par value. Now suppose that interest rates rise and the yield to maturity of the two bonds increases to 9%.

a.What is the new price of the 3-year bond?(Round your answer to 2 decimal places.)

b.What is the new price of the 20-year bond?(Round your answer to 2 decimal places.)

c.Do longer or shorter maturity bonds appear to be more sensitive to changes in interest rates?

Posted Date: May 18, 2024 03:08 AM

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Consider two bonds, a 3-year bond paying an annual coupon of 6%, and a 20-year bond, also

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