The University of California has two bonds outstanding. Both issues have the same credit rating,...
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Finance
The University of California has two bonds outstanding. Both issues have the same credit rating, a face value of $1,000 and a coupon rate of 5%. Coupons are paid twice a year. Bond A matures in 1 year, while bond B matures in 30 years.
The market interest rate for similar bonds is 8%.
** use excel or financial calc if need be
Answer the following please
What is the price of bond A?
What is the price of bond B?
Now assume that yields increase to 11%. What is the price of bond A?
What is the price of bond B now?
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