A 30-year annual bond is offered at 5%. After that the buyer of the bond sells the bond to someone else, but in between interest rates rose to 5.5%. Why is the first buyer of the bond upset with what the second buyer of bond is willing to pay?

6)    A 10-year corporate bond has a coupon rate of 5% with annual payments. If the current value of the bond in the marketplace is $900, then what is the Yield-to-Maturity (YTM)?

Answer rating: 100% (QA)

The first buyer of the bond is upset because the value of the bond decreases when interest rates ris... View the full answer