Bond A1 is a 10-year senior bond issued by company A. Bond A2 is a 5-year junior bond issued by company A. Bond B1 is a 10-year senior bond issued by company B. Bond B2 is a 10-year junior bond issue by company B. Suppose that bonds A1 and B2 pay the same rate. Which bond pays a higher interest rate, A2 or B1?
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Bond A1 is a 10-year senior bond issued by company A.
Bond A2 is a 5-year junior bond issued by company A.
Bond B1 is a 10-year senior bond issued by company B.
Bond B2 is a 10-year junior bond issue by company B.
Suppose that bonds A1 and B2 pay the same rate.
Which bond pays a higher interest rate, A2 or B1?
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- Consider two bonds. Bond A has a face value of ₱100,000 and a stated rate of 12%. Bond B has a face value of ₱100,000 and a stated rate of 8%. Both bonds have the same maturity. Which bond has the greatest interest rate risk? Provide a computationThe principal of a bond is ________. A. the person who sold the bond for the company B. the person who bought the bond C. the interest rate printed on the front of the bond D. the face amount of the bond that will be paid back at maturitySelect the correct answer to each of the following statements. A. Increase B. Decrease C. Remain Constant 1. The amount of interest expense will _______ each payment period for a bond issued at a discount. 2. When a bond is issued at a discount, the cash interest payment will _________ over the life of the bond. 3. When a bond is issued at a premium, the carrying value of the bond will _______ over the life of the bond.
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