Business, 01.03.2021 21:30 heyyyyy3922
The Garraty Company has two bond issues outstanding. Both bonds pay $100 annual interest plus $1,000 at maturity.
Bond L has a maturity of 15 years, and Bond S has maturity of 1 year.
a. What will be the value of each of these bonds when the going rate of interest is
(1) 5 %
(2) 8% and
(3) 12%?
Assume that there is only one more interest payment to be made on Bond S.
b. Why does the longer-term (15-year) bond fluctuate more when interest rates change than does the shorter-term bond (1 year)?
Answers: 2
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The Garraty Company has two bond issues outstanding. Both bonds pay $100 annual interest plus $1,000...
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