Determine the time path of the bond

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Reference no: EM131842278

Lily has a 4 year bond which pays semiannual coupons. Yearly, the bond pays a 5% coupon (per $100 of par). Assume that the annual discount rate is 8%.

1. What type of bond is this? What type would it be is the annual discount rate was 2%?

2. Determine the time path of the bond (price versus time to maturity for each year). Assume every thing other than maturity time remains the same.

Reference no: EM131842278

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