Question
In: Finance
Both Bond A and Bond B have 8 percent coupons and are priced at par value....
Both Bond A and Bond B have 8 percent coupons and are priced at par value. Bond A has 5 years to maturity, while Bond B has 18 years to maturity.
a. If interest rates suddenly rise by 2.4 percent, what is the percentage change in price of Bond A and Bond B? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
b. If interest rates suddenly fall by 2.4 percent instead, what would be the percentage change in price of Bond A and Bond B? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
Solutions
jeff jeffy answered 2 years agoRelated Solutions
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Both Bond A and Bond B have 8.8 percent coupons and are priced at par value....
Both Bond A and Bond B have 8.8 percent coupons and are priced
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years to maturity.
a. If interest rates suddenly rise by 1.4
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Do not round intermediate calculations. Enter your answers as a
percent rounded to 2 decimal places.)
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changes in prices of Bond A and Bond B? (i.e., Bond A - Bond
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(A negative value should be indicated by a minus sign. Do not
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B? (A negative value should be indicated by a minus sign.
Do not round intermediate calculations. Enter your answers as a
percent rounded to 2 decimal places.)
b....
Both Bond A and Bond B have 7 percent coupons and are priced at par value....
Both Bond A and Bond B have 7 percent coupons and are priced at
par value. Bond A has 7 years to maturity, while Bond B has 18
years to maturity. If interest rates suddenly rise by 2 percentage
points, what is the difference in percentage
changes in prices of Bond A and Bond B? (i.e., Bond A - Bond
B). The bonds pay coupons twice a year.
(A negative value should be indicated by a minus sign. Do not
round...
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