For parts a and b what financial calculator's keystroke variables are used Lynn Parsons is considering...
For parts a and b what financial calculator's keystroke variables are used
Lynn Parsons is considering investing
in either of two outstanding bonds. The bonds both have $1,000 par values and
11% coupon interest rates and pay annual interest. Bond A has exactly 5 years to
maturity, and bond B has 15 years to maturity.
a. Calculate the value of bond A if the required return is (1) 8%, (2) 11%, and
(3) 14%.
b. Calculate the value of bond B if the required return is (1) 8%, (2) 11%, and
(3) 14%.
c. From your findings in parts a
and b, complete the following table, and
discuss
the relationship between time to maturity and changing required returns.
d. If Lynn wanted to minimize interest rate
risk, which bond should she purchase? Why?
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For parts a and b what financial calculator's keystroke
variables are used
Lynn Parsons is considering...
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