Question

Bond prices and maturity dates. Les Company is about to issue a bond with annual coupon payments, an annual coupon rate of 8%, and par value of $1,000. The yield to maturity for this bond is 5%.

What is the price of the bond if it matures in 15, 20, 25, or 30 years?

What do you notice about the bond in relationship to the maturity of the bond?

Answer 1

Answers are enlisted below

Step-by-step explanation:

1) year price

5 1120.43

10 1197.35

15 1246.48

20 1277.86

2) inverse relationship as maturity increases bond price increases