Investment Bonds: Yields, Ratings, and Risk Analysis

Investment Bonds: Yields, Ratings, and Risk Analysis

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Question 1

True because the yield to maturity for bond B is always pre-determined and are therefore priced at a premium with lower yield to maturity by pricing them to the call thus depreciating the value of premium.

Question 2

Bond with greater interest risk is a 30 year BB rated bond from Canadian Duck Calls Incorporated because it is highly affected by risks such as inflation unlike a 30 year Canadian Government bond which is very certain and is not much affected because it is governments.