You are a securities salesperson. Many of your clients are elderly people who want very secure investments.

Question:

You are a securities salesperson. Many of your clients are elderly people who want very secure investments. They remember the days when interest rates were very stable (before the 1970s) and bond prices hardly fluctuated at all regardless of their terms. Youâ€™ve had a hard time convincing some of them that bonds, especially those with longer terms, can be risky during times when interest rates move rapidly. Use the BONDVAL program to make up a chart using the format shown to help illustrate your point during discussions with your clients.

The Value of a $1,000 Par, 12% Coupon Bond as a

Function of Term as Interest Rates Change

Bond Term in Years

You are a securities salesperson. Many of your clients are

Write a brief paragraph outlining your warning about bond price volatility to an elderly customer. Refer to yourchart.

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...