Change if the yield to maturity on comparable-risk bond

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Reference no: EM131891728

You own a bond that pays ?$100 in annual? interest, with a ?$1,000 par value. it matures in 15 years. the? market's required yield to maturity on a? comparable-risk bond is 11 percent.

a. Calculate the value of the bond.

b. How does the value change if the yield to maturity on a? comparable-risk bond? (i) increases to 16 percent or? (ii) decreases to 6 percent?

c. Explain the implications of your answers in part b as they relate to? interest-rate risk, premium? bonds, and discount bonds.

d. Assume that the bond matures in 5 years instead of 15 years and recalculate your answers in parts a and b.

e. Explain the implications of your answers in part d as they relate to? interest-rate risk, premium? bonds, and discount bonds.

Reference no: EM131891728

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