Two years ago, Berry Corp. and Canary Corp. both issued bonds that pay $70 per year and will pay $1000 in 15 years. At the time, both bonds sold for $1000 each. Today, Berry bonds cost $845 and Canary bonds cost $1100. They will still both pay $70 per year for the remaining years and $1000 in 13 years.

A. Which company's bonds does the market consider to be riskier? How can you tell?

B. Which company's bonds are expected to give a higher return? How can you tell?

C. Which company's bonds would you buy? Why? What's the trade-off here?

Answer rating: 100% (QA)

A Based on the bond prices the market considers Berry Corps bonds to be riskier This is because the ... View the full answer