Question: 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)

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) decline from 9 percent to 8 percent.

a. What is the bond price at 9 percent?

b. What is the bond price at 8 percent?

c. What would be your percentage return on investment if you bought when rates were 9 percent and sold when rates were 8 percent?

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