Construct some simple examples to illustrate your answers to the following: a. If interest rates rise, do
Question:
Construct some simple examples to illustrate your answers to the following:
a. If interest rates rise, do bond prices rise or fall?
b. If the bond yield is greater than the coupon, is the price of the bond greater or less than 100?
c. If the price of a bond exceeds 100, is the yield greater or less than the coupon?
d. Do high-coupon bonds sell at higher or lower prices than low-coupon bonds?
e. If interest rates change, does the price of high-coupon bonds change proportionately more than that of low-coupon bonds?
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a Fall eg 1year 10 bond is worth 11011 5 100 if r 5 10 a...View the full answer
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Related Book For 
Principles of Corporate Finance
ISBN: 978-0077404895
10th Edition
Authors: Richard A. Brealey, Stewart C. Myers, Franklin Allen
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