Last Year, Forest Products Issued Both 5-Year and 10-Year Bonds

question 100

Multiple Choice

Last year, Forest Products issued both 5-year and 10-year bonds at par.The bonds each have a coupon rate of 5.5 percent, paid semiannually, and a face value of $1,000.Assume the yield to maturity on each of these bonds is now 7.4 percent.What is the percentage change in the price of the 5-year bond since it was issued? The 10-year bond?

• A)-3.39; -6.08
• B)-6.08; -6.33
• C)-6.48; -12.33
• D)-6.48; -10.87
• E)-3.39; -5.77

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Definitions:

Ratio of Benefits

A comparison that measures the relationship between the benefits achieved from an investment or action and the costs incurred.

Management Process

The systematic approach to achieving organizational goals through planning, organizing, leading, and controlling organizational resources.

Organizational Objectives

The specific, measurable goals that a company aims to achieve to fulfill its mission and progress towards its vision.

College Degree

An academic degree awarded by colleges or universities upon completion of a course of study demonstrating mastery or high-order overview of a specific field of study.