A 25-year maturity mortgage-backed bond is issued.The bond has a par value of $10,000 and promises to pay an 8 percent annual coupon.At issue,bond market investors require a 12 percent interest rate on the bond.Assume that 20 years after the bond is issued,bond market investors require a 15 percent interest rate on the bond.What is the market price of the bond?
A) $5,686
B) $6,863
C) $7,653
D) $14,270
Correct Answer:
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