Relationship between the interest rate and the price of bond

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A bond that will mature in three years has a coupon payment of $1200; interest is paid and compounded annually. Its face value is $25,000 and the yield on bonds of similar risk and maturity is 4.0%. What will be the price of this bond? Suppose the market rate of interest fell to 3.5%; what would be the new price of the bond? Use Excel (or some other spreadsheet software) to graph the relationship between the interest rate and the price of this bond.

Reference no: EM131891519

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