Value moves when interest rates change
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Calculate the following Bond Values:
Bond A: 5 year bond, CPN = 7.5%, par value = $1000, Required Return = 12%
Bond B: 5 year bond, CPN = 0%, par value = $1000, Required Return = 5.75%
Bond C: 10 year bond, CPN = 4.25%, par value = $1000, Required Return = 7%
Explain why and how the value of corporate bonds (par @ $1,000) moves when interest rates change. What risks exists for a company with regards to their bond rating?
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The value moves when interest rates change are examined.
Education
- MBA, Indian Institute of Finance
- Bsc, Madras University
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