Consider 2 bonds, A and B. The coupon rates are 10% and the face values are $1,000

Question:

Consider 2 bonds, A and B. The coupon rates are 10% and the face values are $1,000 for both bonds. Both bonds have annual coupons. Bond A has 15 years to maturity while bond B has 25 years to maturity.

a) What are the prices of the two bonds if the relevant market interest rate for both bonds is 11%?

b) What are the prices of the two bonds if the relevant market interest rate increases to 12.9%?

c) What are the prices of the two bonds if the relevant market interest rate decreases to 7.6%?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...