Assume today is April 1, 2021 and that all bonds pay interest semi-annually with a face value of $1,000. YTM = Current yield + Capital Gains yield; CY = Annual Interest/Current Price

ABC is A rated; AA Treasuries yield 3-year is 1.25%, 10-year 1.75%

A rated bonds should yield (return) 0.25%-0.75% more than AA bonds.

5 Years ago, ABC issued 7% coupon paying bonds with a face value set to mature on April 1, 2031. Growth concerns have forced monetary authorities throughout the world to lower interest rates during the past several years and as such, the price of these ABC bonds has risen to $1150.00

1. List two factors that would increase the riskiness of a bond as it relates to a change in interest rates.