Q9

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 6%. 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 7%. Part 2 (1) Attempt 1/10 for 10 pts. What is the price of bond B ? Now assume that yields increase to 10%. What is the price of bond A? Part 4 What is the price of bond B now