Question: Exercise 1: Suppose there are two bonds you are considering: Bond A Bond B Maturity (years) 20Y 30Y Annual Coupon rate (%) 12% 8% Par

Exercise 1: Suppose there are two bonds you are considering: Bond A Bond B Maturity (years) 20Y 30Y Annual Coupon rate (%) 12% 8% Par Value 1000 10000 a) If both bonds had a required rate of return of 10%, what would the bonds' prices be? b) Re-calculate the prices of the bonds if the required return falls to 9%. Could you explain why the price increases or decreases given this change in required return

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