Question: Problem 10-9 Interest rate effect [LO1O-3] Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates
Problem 10-9 Interest rate effect [LO1O-3] Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decrease from 14 to 10 percent. a. What is the bond price at 14 percent? b. What is the bond price at 10 percent? c. What would be your percentage return on the investment if you bought when rates were 14 percent and sold when rates were 10 percent? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
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