3. Bond prices and yields (S3.1) Construct some simple examples to illustrate your answers to the following:
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3. Bond prices and yields (S3.1) Construct some simple examples to illustrate your answers to the following:
a. If interest rates rise, do bond prices rise or fall?
b. If the bond yield to maturity is greater than the coupon, is the price of the bond greater or less than 100?
c. If the price of a bond exceeds 100, is the yield to maturity greater or less than the coupon?
d. Do high-coupon bonds sell at higher or lower prices than low-coupon bonds?
e. If interest rates change, do the prices of high-coupon bonds change proportionately more than that of low-coupon bonds?
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Related Book For
Principles Of Corporate Finance
ISBN: 9781264080946
14th Edition
Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans
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