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You are called in as a financial analyst to appraise the bondsof Olsen’s Clothing Stores. The $1,000 par value bonds have aquoted annual interest rate of 12 percent, which is paidsemiannually. The yield to maturity on the bonds is 14 percentannual interest. There are 20 years to maturity. Use Appendix B andAppendix D for an approximate answer but calculate your finalanswer using the formula and financial calculator methods. a.Compute the price of the bonds based on semiannual analysis. b.With 15 years to maturity, if yield to maturity goes downsubstantially to 10 percent, what will be the new price of thebonds?
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