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Bond value and time-Constant required returns Pecos Manufacturing has just issued a 15 -yoac, 13% coupon interest rate, $1,000-par bond that pays interest annually The
Bond value and time-Constant required returns Pecos Manufacturing has just issued a 15 -yoac, 13% coupon interest rate, $1,000-par bond that pays interest annually The required retum is curenty 14%, and the compary is certan it will reman at 14% unta the bond maturps in 15 yoan a. Assiming that the roquired retum does remain at 14% unst maturity, find the value of the bond with (1) 15 years, (2) 12 years, (3) 9 years, (4) 6 years, (5) 3 yeen, (5) 1 year to maturity b. Al ese equal, when the required retum differ from the coupon rate and is conatant to maturfy, what happens to the bond value as time passes? Explain in light of the following graph Graph/chart Imod to be constant to maturity, what happens to the bond value as time moves a. (1) The value of the bond with 15 years to maturity is $ (Round to the nearest cent.) (2) The value of the bond with 12 years to maturity is $ (Round to the nearest cent.) (3) The value of the bond with 9 years to maturity is $ (Round to the nearest cent.) (4) The value of the bond with 6 years to maturity is $ (Round to the nearest cent.) (5) The value of the bond with 3 years to maturity is $ (Round to the nearest cent.) (6) The value of the bond with 1 year to maturity is $ (Round to the nearest cent.) b. Al else cemanng the same, when the required return differs from the coupon interest rate and is assumed to be constant to maturity, what happens to the bond vale as time moves toward maturty? (Soloct the bett antwer below) A. The bond value approaches the amount of the last interest paymers B. The bond value approaches the par value c. The bond value approaches zaro D. The bond value approaches ivfinity
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