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The Time Decay of Bond Premium and Discount—An Analysis of the Time Passage Effect on Bond Prices

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Figure

Table 1. The prices for bonds with a face value of $1000, coupon rates of 12%, 10%, 8%, 6%, and 4% respectively (assum- ing annual payment), and terms to maturity from 0 to 20 years when the market rate of interest is 8%
Table 2. The convergence of bond prices toward face value as they approaches maturity date
Figure 2. Bond prices as a function of term remaining until maturity: the face value is $1000, coupon rates are 12%, 10%, 8%, 6%, and 4% respectively (assuming annual payment), and all the bonds start with an initial term to maturity of 20 years when the m

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