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Rick bought a 30 year old bond when it was issued by Macroflex Corporation 15 years ago The bond has $1000 facevalue and a coupon rate equal to 7% and the coupon is paid every six month

Rick bought a 30-year old bond when it was issued by Macroflex Corporation 15 years ago. The bond has $1,000 facevalue and a coupon rate equal to 7% and the coupon is paid every six month. if the yield on similar-risk investments is 8%:
a) what is the current market value (price) of the bond?b) Suppose the interest rate levels rise to the point where such bonds now yield 10%. What would be the price of Macroflex bond?c) At what price would Macroflex bonds sell if the yield on them was 5%?d) What do you observe regarding the relationship bet interest rate (YTM) bond's price?e) What do you observe regarding the relationship between coupon, YTM, and the bond's price?

 

Apr 29 2020 View more View Less

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