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Bonds A, B, C, and D All Have a Face

Question 25

Short Answer

Bonds A, B, C, and D all have a face value of $1000 and carry a 7% coupon. The time remaining until maturity is 5, 10, 15, and 25 years for A, B, C, and D, respectively. Calculate their market prices if the rate of return required by the market on these bonds is 6% compounded semiannually. Summarize the observed pattern or trend in a brief statement.

Correct Answer:

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C = $1098....

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