Question
BOND VALUATIO N. An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 10% annual coupon. Bond
BOND VALUATION. An investor has two bonds in his portfolio that have a face value of $1,000 and pay a 10% annual coupon. Bond L matures in 15 years, while Bond S matures in 1 year.
What will the value of each bond be if the going interest rate is 5%, 8%, and 12%? Assume that only one more interest payment is to be made on Bond S at its maturity and that 15 more payments are to be made on Bond L.
Why does the longer-term bonds price vary more than the price of the shorter-term bond when interest rates change?
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The Infographic Guide To Personal Finance
Authors: Michele Cagan CPA, Elisabeth Lariviere
1st Edition
1507204663, 978-1507204665
