Two Discount Bonds Both Have a Face Value of $100

question 65

Essay

Two discount bonds both have a face value of $100 and yield 5%, but one has one year to maturity and the other has two years to maturity. Find the price of both bonds and explain why one is higher than the other.

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Definitions:

Carbon Dioxide

A colorless, odorless gas produced by burning carbon and organic compounds and by respiration. It is naturally present in the air and absorbed by plants in photosynthesis.

Marine Life

Organisms that inhabit the ocean and other saltwater environments, including fish, mammals, invertebrates, and plants.

Large Igneous Provinces

Vast accumulations of igneous rocks that result from the massive outpourings of lava and are associated with volcanic eruptions and plate tectonics.

Geological Events

Natural occurrences like earthquakes, volcanic eruptions, or plate movements that shape the earth's surface and environment.