A Would a 10-Year, 15% U

question 62

Essay

a. Would a 10-year, 15% U.S. Treasury note be priced in the market to yield more, less, or the same as a 10-year, 8% Treasury note? Explain.
b. How would you expect the yields on the following two bonds to compare with each other? Both are rated A.
ABC Corp. 18s of 2011, callable in 2007
PDQ Corp. 18s of 2009, non-callable
c. How would the yields on the bonds in part b compare if their coupons were 8 instead of 18?

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