Question
QUESTION 5 EXHIBIT 1 Fixed-Rate Bonds Issued by Pro Star, Inc. Bond Maturity Coupon Type of Bond Bond #1 1 October 20X3 4.40% annual Option-free
QUESTION 5
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EXHIBIT 1 Fixed-Rate Bonds Issued by Pro Star, Inc.
Bond
Maturity
Coupon
Type of Bond
Bond #1
1 October 20X3
4.40% annual
Option-free
Bond #2
1 October 20X3
4.40% annual
Callable at par on 1 October 20X1 and on 1 October 20X2
Bond #3
1 October 20X3
4.40% annual
Putable at par on 1 October 20X1 and on 1 October 20X2
All else being equal, if the investor assumes an interest rate volatility of 15% instead of 10%, the bond that would most likely decrease in value is:
A. bond #1
B. bond #2
C. bond #3
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Auditing A Business Risk Approach
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg
8th edition
978-0538476232
