Two bonds A and B have the same credit rating, the same par value and the...

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Two bonds A and B have the same credit rating, the same par value and the...

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 five (5) years to maturity. Please demonstrate your understanding of interest rates risk by answering the following questions :

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?
Please substantiate your argument with numerical examples.
As a bond investor, if you expect a slowdown in the economy over the next 12 months, what would be your investment strategy?

business economics

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Answer 1

Answer #1

I am the solving first three harts. . Bond Bond B 17 Particulares YTM coupon Rute Par value Maurity forced Coupon amount Bruc

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