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Discuss which bond will trade at a higher price in market

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Hello Professionals, please help me with below questions.

Two bonds A and B have the same credit rating, the same par value and the same coupon rate. Bond A has 30 years to maturity and bond B has 5 years to maturity.

  • Discuss which bond will trade at a higher price in the market
  • Discuss what happens to the market price of each bond if the interest rates in the economy go up.
  • Which bond would have a higher percentage price change if interest rates go up?
  • Try to substantiate your argument with a numerical example.

As a bond investor, if you expect slowdown in the economy over the next 12 months, what would be your investment strategy?

Reference no: EM132354661

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