14: Asset Valuation: Debt Investments: Basic Concepts

The bond price has to decrease if the interest rate increases since a higher discount rate has to be used to compute the present value of the bond cash flows. The bond price change is computed as follows: Bond Price = 6/1.05 + 6/1.052 +106/1.053 – 100 = -$2.72 . Question ID: 13631 ................
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