Question: Your company issues two bonds. Each has a face value of $100 and matures in 10 years.. One has zero coupon payments, and the other

Your company issues two bonds. Each has a face value of $100 and matures in 10 years.. One has zero coupon payments, and the other pays $10 per year.

a) Calculate the price of each bond if the interest is 3%.

b) Calculate the price of each bond if the interest is 6%.

c) Calculate the percentage change in price of the two bonds.

d When the interest rate rises from 3% to 6%, which bond price falls by a larger percentage? Explain why.

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