Problem 7.18 – Bond Price Movements and Time to Maturity Relationship

Fundamentals of Corporate Finance

Ross, Westerfield, and Jordan

13th Edition

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Difficulty – Medium

Determine the current price and future prices at various time points for two bonds with differing characteristics, given their coupon rates, YTMs, and time to maturity. Explain the observed pattern and graph bond prices against time to maturity.

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