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An investor has 2 bonds in his portfolio that have a face value of $1000 and pay an 11% annual coupon. Bond L matures in 12 years, Bond S matures in 1 year.

What will the value of each bond be if the going interest rate is 6%, 8%, and 12%?

(Assume that only 1 more interest payment is to be made on Bond S at its maturity and 12 more payments are to be made on Bond L.)

Financial Management, Finance

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