A 5 year, $1000 par value bond with an annual coupon rate of 2% was issued for par. At the same time, a 30 year, $1000 par value bond with an annual coupon rate of 2% was issued for par. Which company had the lower credit rating, the one that issued the 5 year bond or the one that issued the 30 year bond? Explain. 5 points A year later, interest rates had risen by 2% for each bond. What were the new prices for each of the bonds? 10 points What was the percent change in the price of each of the bonds over the one year period? 10 points Which bond was more affected by the change in the interest rate? Explain

BAII PLUS