1 explain why we observe that when interest rates increase, Ask an Expert

Finance

1. Explain why we observe that, when interest rates increase, bond prices decrease! Don’t lenders like high interest rates?

2. An investment provides cash inflows of $500 per year for 15 years. What is the payback period if the initial cost is $10,000? Should you proceed with this investment?

3. Assume a StatOil (STL) bond with a 10% coupon and 8% yield-to-maturity. If the bond’s yield-to-maturity remains constant, the in one year, will the bond’s price be higher, lower, or unchanged? Explain briefly.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92054652

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