Valuation of the bond, What is the valuation of the bond if

Valuation of the bond

Reference no: EM13789916

You need to present to your client, Alice Cartwright, some investment options for her to choose from. Her choices are between the following 2 bonds:

Bond	Description	Face Value	Coupon Rate	Years to Maturity
Bond A	corporate bond in ABA company	$1,000	10% coupon	12 years, paying annual payments
Bond B	corporate bond in ABA company	$1,000	10% coupon	2 years, paying annual payments

For each bond, answer the following questions:

What is the valuation of the bond if the market interest rates are 12%?
What is the valuation of the bond if the market interest rates are 6%?
What is the valuation of the bond if the market interest rates are 2%?
What is the value of the bond at the present time?
What will the bond be worth at maturity?
Are there differences in bond prices? If so, explain why.

Reference no: EM13789916

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