4. You read the following statement in a financial report: The company purchased a zero coupon bond...
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4. You read the following statement in a financial report: "The company purchased a zero coupon bond three years ago at its par value of $100,000 and five years remaining to maturity. The market price of this debt obligation today is $75,000. The decline in the value of the obligation is mainly due to two factors: an increase in market yields for comparable instruments and the decrease in the time to maturity. Another reason has been the sudden steepening of the yield curve. Even if the Fed has not made a move on short term rates, this change led to declines in bond prices" Which portions of the statement seem reasonable or unreasonable? Explain clearly.
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