If the market interest rate remains at 5% for the next 29 years, and if Leggio's credit rating remains constant, then the price

Question

sveta [45]

2 years ago

11

If the market interest rate remains at 5% for the next 29 years, and if Leggio's credit rating remains constant, then the price

of its bonds will decrease gradually over time and be exactly $1,000 at maturity. True or false

Business

1 answer:

sweet [91] · Answer 1 · 2022-06-23T14:16:10+03:00

Answer: True

Explanation:

A bond is a debt tool that provides a periodic stream of interest payments to investors while repaying the principal sum on a specified maturity time.

In the U.S., the face value is usually $1,000 or a multiple of $1,000. Hence as the credit value remains constant over the span of the 29 years, the bond keeps decreasing.