Suppose Ascension has three debt obligations outstanding. Bond A has a $1000 par value, a...
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Suppose Ascension has three debt obligations outstanding. Bond A has a $1000 par value, a 5% annual coupon, and a 10-year maturity. Bond B is a zero-coupon bond with a $1000 par value and a 10-year maturity. Bond C has a maturity of 1 year, an annual coupon rate of 4%, and a par value of $100. Bond D is a zero-coupon bond with a $100 par and a 1-year maturity. The yield curve is flat, and the yield to maturity on all 4bonds is 4% per year.
(1 point) Find the price of each bond.
Bond A price=
Bond B price=
Bond C price=
Bond D price=
(1 point) Suppose the yield to maturity falls to 3% per year. Find the price of each bond.
Bond A price=
Bond B price=
Bond C price=
Bond D price=
(2 points) Find the percentage change in each bond price.
Bond A price=
Bond B price=
Bond C price=
Bond D price=
(2 points) Which bond is the most sensitive to changes in the yield to maturity? Why
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