You are a personal financial planner working with a married couple in their early 40s who have

Question:

You are a personal financial planner working with a married couple in their early 40s who have decided to invest $100,000 in corporate bonds. You have found two bonds that you think will interest your clients. One is a zero coupon bond issued by PepsiCo with an effective interest rate of 9 percent and a maturity date of 2031. It is callable at par. The other is a Walt Disney bond that matures in 2093. It has an effective interest rate of 9.5 percent and is callable at 102 percent of par. Which of the two bonds is less likely to be called if interest rates fall over the next few years?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Financial Accounting

ISBN: 9781264229734

11th Edition

Authors: Robert Libby, Patricia Libby, Frank Hodge

Question Posted: