You own a bond that pays $120 in annual interest, with a S1,000 par value. It matures in 0 years. The market's required yield to maturity on a comparable-risk bond is 11 percent. a. Calculate the value of the bond. b. How does the value change if the yield to maturity on a comparable-risk bond (i) increases to 5 percent or (ii) decreases to 8 percent?.c. Explain the implications of your answers in part b as they relate to interest-rate risk, premium bonds, and discount bonds. d. Assume that the bond matures in 5 years instead of 10 years and re-calculate your answer in parts a and b. e. Explain the implications of vour answers in part d as they relate to interest-rate risk, premium bonds, and discount bonds. f. What is the value of the bond if the market's required yield to maturity on a comparable-risk bond is 11 percent?
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You own a bond that pays $120 in annual interest, with a S1,000 par value. It matures in 0 years. Th...
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