Document1 - Word AutoSave on ile Home S Insert Review ViewHelp 2-0- Design Layout References...
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Accounting
Document1 - Word AutoSave on ile Home S Insert Review ViewHelp 2-0- Design Layout References Mailings Calibr (Body) - 11 A A A A BIU.. * * A..A. Comments E B E. 21 . Search al AaBbca AaBb Dd AaBb AaBbcc AaB AalbcDAoBbcod Aabcbd. 1 Normal No Spac. Heading 1 Heading 2 Title Subtitle Subtle Em... Emphasis Styles 1. Share find Belace Select Editing - . Dictate Format Painter Clipboard Font Paragraph Consider three bonds with maturities of 5, 15, and 25 years. Each bond has a coupon rate of 6% and sells at its face value of $1,000, Assume annual coupon payments. Use this information to answer the following questions: (a) What would be the market price of each bond if their yields to maturity (YTMS) were 3% ? (3 pts.) (b) What would be the market price of each bond if their YTMs were 9% ? (3 pts.) (c) On a single chart, graph the relationship between bond prices and the YTMs for the 3 bonds. Following the convention from the recorded lecture, you should have YTMs across the X axis and bond prices along the Y-axis. What conclusions can you draw regarding the relationship between time to maturity and the sensitivity of bond prices to changes in interest rates? (4 pts.) 129 words
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