Question
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
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 7%.
- What is the price of bond A?
2. What is the price of bond B?
3. Now assume that yields increase to 10%. What is the price of bond A?
4. What is the price of bond B now?
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Global Corporate Finance A Focused Approach
Authors: Suk Hi Kim, Kenneth A Kim
2nd Edition
9814618004, 9789814618007
