# Question

Toxaway Telephone Company has a $1,000 par value bond outstanding that pays 6 percent annual interest. If the yield to maturity is 8 percent, and remains so over the remaining life of the bond, the bond will have the following values over time:

Remaining Maturity Bond Price

15 ................ $795.67

10 ................ $830.49

5 ............... $891.86

1 ............... $973.21

Graph the relationship in a manner similar to the bottom half of Figure 10-2. Also explain why the pattern of price change takes place.

Remaining Maturity Bond Price

15 ................ $795.67

10 ................ $830.49

5 ............... $891.86

1 ............... $973.21

Graph the relationship in a manner similar to the bottom half of Figure 10-2. Also explain why the pattern of price change takes place.

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