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    Bonds: What is the Value

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    Please help with the following problem:

    You purchased a $1,000 five percent coupon bond that matures in 10 years. How much would your bond be worth if interest rates fall to 4% the day after you purchase the bond? What would the bond be worth in one year if interest rates fell to 4% at that point?

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    https://brainmass.com/business/bond-valuation/bonds-determining-value-199741

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    How much would your bond be worth if interest rates fall to 4% the day after you purchase the bond?

    First, we will assume that 1 year is equal to 360 days and that the bond is semiannual bond. So, if the interest rates fall to 4% the day after you purchase the bond, it means that the bond will matures in 9 years and 359 days.

    So, the period to be used to calculate the ...

    Solution Summary

    This solution is comprised of a detailed explanation which is provided in step by step formatting, including all required equations and an explanation of the variables needed. A Word document accompanies this solution and provides proper formatting of the response.

    $2.19

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