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You are called in as a financial analyst to appraise the bonds of Olsen’s Clothing Stores. The $1,000 par value bonds have a quoted annual interest rate of 11 percent, which is paid semiannually. The yield to maturity on the bonds is 12 percent annual interest. There are 25 years to maturity.

A. Compute the price of the bonds based on semiannual analysis. B. With 20 years to maturity, if yield to maturity goes down 10%, what will be the new price of bonds?

Financial Management, Finance

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