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A 6-year 5.9% annual coupon bond is selling to yield 7%. The bond pays interest annually. The par value of the bond is $100. a. What is the price of the 6-year 5.9% coupon bond selling to yield 7%? b. What is the price of this bond one year later assuming the yield is unchanged at 7%? c. Suppose that one year later the yield of the bond decreases to 6.1%. What is the price change attributable to moving to maturity assuming no change in the discount rate? What is the price change attributable to a decrease in the discount rate from 7% to 6.1%? What is the total price change?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92688096

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