An insurance company purchases bonds in the secondary, Financial Management

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An insurance company purchases bonds in the secondary

An insurance company purchases bonds in the secondary market with 11 years to maturity. Total par value is $55 million. The coupon rate is 11 percent, with the required rate of return today is 10 percent.

A. What is the maximum price the insurance company would pay today for these bonds?

B. What is the modified duration on this bond?

C. If the expected required rate of return in 4 years is 9 percent, what will the market value of the bonds be then?

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Financial Management: An insurance company purchases bonds in the secondary

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Financial Management: An insurance company purchases bonds in the secondary

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