What if the interest rate is 6 percent

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Reference no: EM131220658

Suppose a bond has a maturity of 3 years, annual coupon payments of $5, and a face value of $100.

a. If the interest rate is 4 percent, is the price of the bond higher or lower than the face value? What if the interest rate is 6 percent?

b. For what range of interest rates does the price exceed the face value? Can you explain the answer?

Reference no: EM131220658

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