Indicate which bond in the following pairs of bonds is likely to bear the higher interest...

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Indicate which bond in the following pairs of bonds is likely to bear the higher interest...

Indicate which bond in the following pairs of bonds is likely to bear the higher interest rate (yield) and state why. If there is no general reason for a difference, indicate that they would be the same.

e. A municipal bond (term) with maturity in five years or a municipal bond (term) with maturity in 20 years

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Answer 1

Answer #1

The municipal bond with term of 20 years will have higher yield as longer term bonds usually have higher yields.

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Answer 2

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