You buy a 5-year 10 coupon bond with face value 1000 today, Financial Management

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You buy a 5-year 10 coupon bond with face value 1000 today

You buy a 5-year, 10% coupon bond with face value $1000 today. The market interest rate currently is 10% also.

a. What is the market price of the bond today?

b. You hold the bond for a year and sell it off a year later when the interest rate is 8%. What is the market price of the bond a year later?

c. What is your one period rate of return on the bond?

d. Suppose the interest rate next year is 12%. What are the market price and one period rate of return next year?

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Financial Management: You buy a 5-year 10 coupon bond with face value 1000 today

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Financial Management: You buy a 5-year 10 coupon bond with face value 1000 today

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