Question
In: Finance
(Bonds) A bond with a $1,000 par, 6 years to maturity, a coupon rate of 6%,...
(Bonds) A bond with a $1,000 par, 6 years to maturity, a coupon rate of 6%, and annual payments has a yield to maturity of 3.8%. What will be the percentage change in the bond price if the yield changes instantaneously to 5.3%? (If your answer is, e.g., -1.123%, enter it as -1.123. If the sign of the price change is incorrect, no credit will be given.)
Solutions
Expert Solution
| Par value | $ 1,000.00 |
| Coupon rate | 6.00% |
| Coupon payment per period | $ 60.00 |
| YTM | 3.80% |
| Years to maturity | 6 |
| Price when YTM is 3.80% | $1,116.08 |
| 2nd YTM | 5.30% |
| Price when YTM is 5.30% | $1,035.19 |
| Change in price | -$80.89 |
| Percentage change in price | -7.25% |
Excel formulas:
jeff jeffy answered 1 year agoRelated Solutions
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Yield to Maturity
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8.75
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Yield to Maturity
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1
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B
2
9.50
C
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10.00
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