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Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 14 percent to 10 percent.

a. What is the bond price at 14 percent?

b. What is the bond price at 10 percent?

c. What would be your percentage return on investment if you bought when rates were 14 percent and sold when rates were 10 percent? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Financial Management, Finance

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