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Business, 15.04.2021 15:30 AlexGaming1822

Rick bought a 30-year bond when it was issued by Macroflex Corporation 8 years ago. The bond has a $1,000 face value and a coupon rate equal to 5 percent and the coupon is paid every six months. If the yield on similar-risk investments is 6 percent, a. What is the current market value (price) of the bond? b. Suppose interest rate levels rise to the point where such bonds now yield 8 percent. What would be the price of Macroflex bond? c. At what price would Macroflex bonds sell if the yield on them was 4 percent? d. What do you observe regarding the relationship between interest rate (YTM) bond’s price? e. What do you observe regarding the relationship between coupon, YTM and the bond’s price?

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