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Consider a one-year maturity, $120,000 face value bond that pays a 10 percent fixed coupon annually....

Consider a one-year maturity, $120,000 face value bond that pays a 10 percent fixed coupon annually.

  1. What is the price of the bond if market interest rates are 7 percent?
  2. What is the price of the bond if market interest rates are 5 percent?
  3. What is the percentage price change for the bond if interest rates increase 70

            basis points from the original 6 percent?

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