Question: Describe how you set up the calculations. Explain why the change in interest rates changed the price of the bond. You are considering writing a

Describe how you set up the calculations. Explain why the change in interest rates changed the price of the bond.
You are considering writing a bond for 20 years and paying annual interest of 6% of the face (par value) of $1,000. Interest rates are 6% when issued. What is the market value of this bond once you write it?
Overnight the market rate for similar bonds falls to 5%. What is the new market value of the bond?

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