There is an inverse relationship between bond prices and yields. This inverse relationship will be demonstrated by

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There is an inverse relationship between bond prices and yields. This inverse relationship will be demonstrated by calculating bond prices to show that interest rates move inversely: if yields rise, then bond prices fall. Bonds will be sold either at a premium or a discount. By keeping this in mind respond to the following question.
You currently own a 30 year Treasury bond at 4% interest, paid semiannually. The market interest rates for like securities rose to 5%. Would your bond sell for a premium or a discount? Why? What would the market value of your bond be? Prove your answer by showing your work.
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Auditing and Assurance Services A Systematic Approach

ISBN: 978-1259162343

9th edition

Authors: William Messier, Steven Glover, Douglas Prawitt

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