What will the value of each bond

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1) Assume your instructor has two bonds in his portfolio.  Both have face values of $1,000 and pay a 10% annual coupon rate.  Bond L (longer maturity) matures in 15 years    and Bond S (shorter maturity) matures in 1 year

2) What will the value of each bond be if the market interest rate for similar rated and maturing bonds is 5%, 8%, and 12%?

3) Why does the longer-term bond's price (Bond L) vary more than the price of the shorter-term bond (Bond S) when market interest rates change?

     4) Locate the yield curve chart in The Wall Street Journal.  Describe the shape of the yield curve.  Attach the yield curve separate, and simply describe its shape

5) Include your answers in the body of the posting, not as attachments

 

Reference no: EM13284134

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