Question
a. (1) The value of the bond with 15 years to maturity is $ (blank). (Round to the nearest cent.) (2) The value of the
a. (1) The value of the bond with 15 years to maturity is $ (blank). (Round to the nearest cent.)
(2) The value of the bond with 12 years to maturity is $ (blank). (Round to the nearest cent.)
(3) The value of the bond with 9 years to maturity is $ (blank). (Round to the nearest cent.)
(4) The value of the bond with 6 years to maturity is $ (blank). (Round to the nearest cent.)
(5) The value of the bond with 3 years to maturity is $ (blank). (Round to the nearest cent.)
(6) The value of the bond with 1 year to maturity is $ (blank). (Round to the nearest cent.)
b. All else remaining the same, when the required return differs from the coupon interest rate and is assumed to be constant to maturity, what happens to the bond value as time moves toward maturity? (Select the best answer below.)
- The bond value approaches the amount of the last interest payment.
- The bond value approaches zero.
- The bond value approaches infinity
- The bond value approaches the par value
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