# Question

Assume you desire maximum duration to take advantage of anticipated interest rate declines. Answer the following questions based on information taken from Tables 18–6 and 18–7 on page 474.

a. Would you prefer an 8 percent coupon rate bond with a 20-year maturity or a 12 percent coupon rate bond with a 25-year maturity? The market rate of interest is 8 percent.

b. Would you prefer an 8 percent coupon rate bond with a 20-year maturity or a 4 percent coupon rate bond with a 25-year maturity? The market rate of interest is 12 percent.

c. Would you prefer an 8 percent coupon rate bond with a 20-year maturity or a 12 percent coupon rate bond with a 25-year maturity? The market rate of interest is 12 percent.

a. Would you prefer an 8 percent coupon rate bond with a 20-year maturity or a 12 percent coupon rate bond with a 25-year maturity? The market rate of interest is 8 percent.

b. Would you prefer an 8 percent coupon rate bond with a 20-year maturity or a 4 percent coupon rate bond with a 25-year maturity? The market rate of interest is 12 percent.

c. Would you prefer an 8 percent coupon rate bond with a 20-year maturity or a 12 percent coupon rate bond with a 25-year maturity? The market rate of interest is 12 percent.

## Answer to relevant Questions

A 30-year, $1,000 par value zero-coupon bond provides a yield of 11 percent. a. Compute the current price of the zero-coupon bond. (Hint: Simply take the present value of the ending $1,000 payment). b. What is the duration ...Why does Canada represent a relatively poor outlet for achieving risk reduction for U.S. investors? (Merely use your own judgment in answering this question.) Assume you invest in the British equity market and have a 10 percent decline (quoted in British pounds). a. If during this period the pound appreciated by 10 percent against the dollar, what would be your actual return ...What are the three primary approaches to real estate valuation? Should they be combined? In order to turn an investment into a tangible return, a venture capital fund must have an exit strategy. What exit strategies exist, and how are they affected by the stock market?Post your question

0