CourseLover

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    Devry University
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Category > Business & Finance Posted 07 Dec 2017 My Price 10.00

value of each bonds

The Cocoa Cola Company has two bond issues outstanding. Both bonds pay $100 annual interest plus $1,000 at maturity. Bond L has a maturity of 15 years, and Bond S a maturity of 1 year.

 

a. What will be the value of each of these bonds when the going rate of interest is (1) 5%, (2) 8%, and (3) 12%? Assume that there is only one more interest payment to be made on Bond S. (3 points)

 

b. Why does the longer-term (15-year) bond fluctuate more when interest rates change than does the shorter-term bond (1-year)? 

Answers

CourseLover
(12)
Status NEW Posted 07 Dec 2017 06:12 AM My Price 10.00

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