Bond value and time---Constant required returns   Pecos Manufacturing has just issued a 15-year, 9% coupon interest rate

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answerhappygod
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Bond value and time---Constant required returns   Pecos Manufacturing has just issued a 15-year, 9% coupon interest rate

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Bond value and time---Constant required returns   Pecos
Manufacturing has just issued a 15-year, 9% coupon interest rate,
$1,000-par bond that pays interest annually. The required return is
currently 13%, and the company is certain it will remain at 13%
until the bond matures in 15 years. Assuming that the required
return does remain at 13​% until​ maturity, find the value of the
bond with​ (1) ​years, (2) 12​ years, (3) 9​ years, (4) 6​
years, (5) 3​ years, (6) 1 year to maturity. All else remaining
the​ same, when the required return differs from the coupon
interest rate and is assumed to be constant to​ maturity, what
happens to the bond value as time moves toward​ maturity?
Explain in light of the following​ graph:
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