Question

you are considering 2 bonds that will be issued tomorrow. both are rated triple B(BBB) the lowest investment -grade rating, both mature in 20 years. both have a 10% coupon , neither can be called expect for sinking fund purposes, both are offered to you at their 1,000 par value. however bond SFhas a sinking fund while bond NSF does not. under the sinking fund ,the company must call or pay off 5% of the bonds at par each year. the yield curve at the time is upward sloping. the bnd's prices being equal are probably not in equilibrium as bond SF, which has the sinking fund, would generally be expected to have a higher yield tan bond NSF true or false

          you are considering  2 bonds that will be issued tomorrow. both are rated triple B(BBB) the lowest investment -grade rating, both mature in 20 years. both have  a 10% coupon , neither can be called expect for sinking fund purposes, both are offered to you at their 1,000 par value. however bond SFhas a sinking fund while bond NSF does not. under the sinking fund ,the company must call or pay off 5% of the bonds at par  each year. the yield curve at the time is upward sloping. the bnd's prices being equal are probably not in equilibrium as bond SF, which has the sinking fund, would generally be expected to have a higher yield tan bond NSF true or false

Added by Janet S.

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