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Intro The University of California has two bonds outstanding. Both issues have the same credit rating, a face value of $1,000 and a coupon rate
Intro The University of California has two bonds outstanding. Both issues have the same credit rating, a face value of $1,000 and a coupon rate of 5%. Coupons are paid twice a year. Bond A matures in 1 year, while bond B matures in 30 years. The market interest rate for similar bonds is 12% (quoted as a semi-annual simple interest rate, so 6% per 6-month period). Part 1 Attempt 1/2 for 10 pts. What is the price of bond A? 0+ decima Submit Part 2 8 Attempt 1/2 for 10 pts. What is the price of bond B? 0+ decima Submit Part 3 8 Attempt 1/2 for 10 pts. Now assume that yields increase to 15%. What is the price of bond A? 0+ decima Submit Part 4 8 Attempt 1/2 for 10 pts. What is now the price of bond B? 0+ decima Submit
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