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Difference between price risk and reinvestment risk

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Reference no: EM131973220

1. Bond Evaluation Cliffard Clark is a recent retiree who is interested in investing some of his savings in corporate bonds. His financial planner has suggested the following bonds:

Bond A has a 7% annual coupon, matures in 12 years, and has a$1000 face value.

Bond B has a 9% annual coupon, matures in 12 years, and has a $1000 face value.

Bond C has an 11% annual coupon, matures in 12 years, and has a $1000 face value.

Each bond has a yield maturity of 9%.

2. If Explain briefly the difference between price risk and reinvestment risk. which of the following bonds has the most price risk? Which has the most reinvestment risk?

A 1-year bond with a 9% annual coupon

A 5-year bond with a 9% annual coupon

A 5-year bond with zero coupon

A 10-year bond with a 9% annual coupon

A 10-year bond with a zero coupon

Reference no: EM131973220

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