Azusa Pizza company has a 3-year, 8% annual coupon bond with a $1,000 par value. Glendora...

 

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Azusa Pizza company has a 3-year, 8% annual coupon bond with a $1,000 par value. Glendora Pizza has a 12-year, 8% annual coupon bond with a $1,000 par value. Both bonds currently have a yield to maturity of 6%. If the market interest rate increases to 6.5%, what will happen to the bond prices? (The price changes in terms of percentage) Azusa Pizza company has a 3-year, 8% annual coupon bond with a $1,000 par value. Glendora Pizza has a 12-year, 8% annual coupon bond with a $1,000 par value. Both bonds currently have a yield to maturity of 6%. If the market interest rate increases to 6.5%, what will happen to the bond prices? (The price changes in terms of percentage)

Answer rating: 100% (QA)

When market interest rates increase the prices of existing bonds typically decrease This is because the newly issued bonds will offer a higher yield t... View the full answer