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Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250

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BuyFindarrow_forward

Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250
Textbook Problem

If interest rates rise after a bond issue, what will happen to the bond’s price and YTM? Does the time to maturity affect the extent to which interest rate changes affect the bond’s price? (Again, an example might help you answer this question.)

Summary Introduction

To identify: Effect on bond’s price and yield to maturity after a bond issue. Increase in the interest rates and whether the time to maturity affect the value of bond.

Bond Valuation:

Bond valuation refers to the evaluation of bonds value at any point of time which can be used for decision making. Valuation of bond is done for comparison and analysis.

Explanation
  • Issue of longer-term bond will highly affect the yield to maturity as compared to the shorter-term bonds.
  • The longer term bond has m...

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