Toxaway Telephone Company has a $1,000 par value bond outstanding that pays 6 percent annual interest If the yield to maturity is 8 percent, and remains so over the remaining life of the bond, the bond will have the following values over time Remaining Maturity Bond Price 15 $795 67 10 $830 49 5 $8...

As the time to maturity becomes less and less the importance of the differ ...

Toxaway Telephone Company has a $1,000 par value bond outstanding that pays 6 percent annual interest. If

Question:

Toxaway Telephone Company has a $1,000 bond outstanding that pays 6 percent annual interest. If the yield to is 8 percent, and remains so over the remaining life of the bond, the bond will have the following values over time:
Remaining Bond Price
15 ................$795.67
10 ................$830.49
5 ...............$891.86
1 ...............$973.21
Graph the relationship in a manner similar to the bottom half of Figure 10-2. Also explain why the pattern of price change takes place.

Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...