Question
An investor has two bonds in his portfolio that have a face value of $1,000 and pay an 11%annual coupon. Bond L matures in 12
An investor has two bonds in his portfolio that have a face value of $1,000 and pay an 11%annual coupon. Bond L matures in 12 years, while Bond S matures in 1 year,
a. What will the value ofeach bond be if the going interest rate is 6%, 8%, and 12% ?
b. Why does the longer-term bond's price vary more than the price of the shorter-term bond when interest rates change?
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The Company Valuation Playbook Invest With Confidence
Authors: Charles Sunnucks
1st Edition
1838470816, 978-1838470814
