Introduction
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Concepts
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Exercises
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Resolution
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Case
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Discussion
1.
Suppose the Federal Reserve announces an increase in interest rates. How might this effect the CanGo bond issue?
2.
Suppose the Federal Reserve raises interest rates. As a result, CanGo decides to sell the bonds at a discount from par. What will happen to the yield to maturity on the CanGo bonds if they are sold for $993.35 per bond?
3.
Now suppose the Federal Reserve chooses to lower interest rates. How might this affect the CanGo bond issue?
4.
When did the Open Market Committee last meet? Did they raise rates, lower rates, or leave rates unchanged? Did the committee explain their actions? How did the bond markets react to the committee's actions?
5.
Why do you suppose the coupon rate for the CanGo issue is 9%? How was this determined?
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© 2002 by Prentice-Hall, Inc.
