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Suppose there are two bonds you are considering: Bond A Bond B Maturity (years) 16 20 Annual Coupon rate (%) 5 2 Par Value 1000
Suppose there are two bonds you are considering:
|
| Bond A | Bond B |
| Maturity (years) | 16 | 20 |
| Annual Coupon rate (%) | 5 | 2 |
| Par Value | 1000 | 1000 |
- If both bonds had a required rate of return of 4%, what would the bonds prices be?
- Re-calculate the prices of the bonds if the required return falls to 2%. Could you explain why the price increases or decreases given this change in required return?
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Trading For Beginners 25 Secrets To Trade For A Living
Authors: Mark Bresett
1st Edition
1521327742, 978-1521327746
