Problem

Look again at Table 3.4. Suppose that spot interest rates all change to 4%—a “flat” term s...

Look again at Table 3.4. Suppose that spot interest rates all change to 4%—a “flat” term structure of interest rates.

a. What is the new yield to maturity for each bond in the table?


b. Recalculate the price of bond A.

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Solutions For Problems in Chapter 3