9 Ans. Chapter 5 - Suppose you have two bonds with the following characteristics - Bond A Bond B Par Value = $1,000 $1,000 Coupon Rate = 2% 2% Required Return = 5% 5% # of years to maturity = 9 3 Now suppose that the required return increases to 10%. If that happens, which bond would you prefer to hold? You can assess this by determining the impact on the present value of the two bonds based on the current required return and the impact of the change in the required return. Note: Chapter 5 slides 59, 60 and 61 may be helpful to you. In addition, you can look at section 5-10 in the textbook and Section 5-10 in the Chapter 5 Tool Kit beginning on row 436 through 486. Ans. A or B? Why