Ches Problem 10-11 Effect of maturity on bond price [LO10-3) Refer to Table 10-2 a. Assume the Interest rate in the market (yleld to maturity) goes down to 8 percent for the 10 percent bonds. Using column 2, indicate what the bond price will be with a 10-year, a 20-year, and a 30-year time period. Maturity Bond Price 10 year 20 year 30 year b. Assume the interest rate in the market (yleld to maturity) goes up to 12 percent for the 10 percent bonds. Using column 3, indicate what the bond price will be with a 10-year, a 20-year, and a 30-year period. Maturity Bond Price 10 year 20 year 30 year c. Assume the interest rate in the market (yield to maturity) goes down to 8 percent for the 10 percent bonds. If interest rates in the market are going down, which bond would you choose to own? O 10 Years 20 Years 30 Years d. Assume the interest rate in the market yield to maturity) goes up to 12 percent for the 10 percent bonds. If interest rates in the market are going up, which bond would you choose to own? 10 Years 20 Years O 30 Years Table 10-2 Impact of time to maturity on bond prices (10% Interest Payment, Various Times to Maturity) Time Period in Bond Price with 8% Bond Price with 12% Years to Maturity Yield to Maturity Yield to Maturity 0 $1,000.00 $1,000.00 1 1,018.52 982.14 5 1,079.85 927.90 10 1,134,20 887.00 15 1,171.19 863.78 20 1,196.36 850.61 25 1.213.50 843.14 30 1.225.16 838.90