Kurt's Forest Products is currently issuing both 5-year and 10-year bonds at par.The bonds each pay 6.5 percent annual interest and have face values of $1,000.You decide to purchase one of each of these bonds.Assume the yield to maturity on each of these bonds is 7.4 percent 1 year from now.Given this,you will realize _____ percent price depreciation on the 5-year bond and _____ percent price depreciation on the 10-year bond.

Question

Quizplus · Accepted Answer

Percentage price change = ($969.79 - $1,000)/$1,000 = -3.02 percent Percentage price change = ($942.35 - $1,000)/$1,000 = -5.77 percent

Kurt's Forest Products Is Currently Issuing Both 5-Year and 10-Year