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A bond that will mature in three years has a coupon payment of $1200; interest is paid and compounded annually. Its face value is $25,000 and the yield on bonds of similar risk and maturity is 4.0%. What will be the price of this bond? Suppose the market rate of interest fell to 3.5%; what would be the new price of the bond? Use Excel (or some other spreadsheet software) to graph the relationship between the interest rate and the price of this bond.

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Financial Management, Finance

Category:- Financial Management
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