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    Corporate Finance; Change in the Value of Outstanding Bonds Based on Interest Rates

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    Scenario:

    My pal Joe told me that the value of outstanding bonds changes whenever the going rate of interest changes. He expanded on his comments by saying that short-term interest rates are more volatile than long-term interest rates. Therefore short-term bond prices are more sensitive to interest rates than long-term bond prices.

    Is Joe right?

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    https://brainmass.com/business/interest-rates/corporate-finance-change-in-the-value-of-outstanding-bonds-based-on-interest-rates-370646

    Solution Preview

    Joe is right about the first point but wrong about the conclusion. Bond prices reflect the present value of a ...

    Solution Summary

    The solution analyses the truth of the claim that the value of outstanding bonds change whenever the going rate of interest does and that short-term interest rates are more volatile than long-term ones. 78 words.

    $2.49

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