Question: please answer A,B,C, and D You are examining three bonds with a par value of $1,000 (you receive $1,000 at maturity) and are concerned with
(Bond valuation) You are examining three bonds with a par value of $1,000 (you receive $1,000 at maturity) and are concerned with what would happen to their maxket value if interest rates (or the market discount rate) changed. The three bonds are Bond A-a bond with 6 years let to maturity that has an annual coupon interest rate of 11 percent, taa the interest is paid sersiannually. Bond B-a bond with 8 years left to maturity that has an annual coupon interest rate of 11 percent, but the interest is paid semiarnually. Bond C-a bond with 15 years left to maturity that has an annual coupon interest rate of 11 pencent, but the intorost is paid semiannualiy. What would be the value of these bonds if the makket discount rate were a. 11 percent per year compounded semiannually? b. 7 percent per year compounded semiannually? c. 15 percent per year compounded semiannually? d. What observations can you make about these results? a. If the market discount rate were 11 percent per year compounded semiannually, the value of Bond A is
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