Question

An investor has two bonds in his portfolio that have a face value of $1000 and...

An investor has two bonds in his portfolio that have a face value of $1000 and pay a 10% annual coupon. Bond A matures 20 years and Bond B matures in 5 years.

a) Estimate the value of each bond if the required return is 9%

b)Estimate the value of each bond of the required return is 11%.

(Please explain the answer in detail, thank you)

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