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Question
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
Answer
This answer is hidden. It contains 19 characters.
Related questions
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