Block 17e Chapter 10 Problem 7 Bond Maturity Effect (LO10-3) Toxaway Telephone Company has a $1,000 par value bond outstanding that pays 6 percent annual interest. If the yield to maturity is 8 percent, and remains so over the remaining life of the bond, the bond will have the following values over time: Remaining Maturity 10 Bond Price $795.67 $830.49 $891.86 $973.21 Graph the relationship in a manner similar to the bottom half of Figure 10-2 of the textbook. Also explain why the pattern of price change takes place. 6% Bond, $1,000 Par Value Bond Value $1,000 900 800 Assumes 8% Yield to Maturity 700 25 Years