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

Expert Solution


Related Solutions

Both Bond A and Bond B have 7.8 percent coupons and are priced at par value....
Both Bond A and Bond B have 7.8 percent coupons and are priced at par value. Bond A has 9 years to maturity, while Bond B has 16 years to maturity.  a. If interest rates suddenly rise by 2.2 percent, what is the percentage change in price of Bond A and Bond B? Bond A = _______ %Bond B = _______ %b. If interest rates suddenly fall by 2.2 percent instead, what would be the percentage change in price of Bond A...
Both Bond A and Bond B have 7.1 percent coupons and are priced at par value....
Both Bond A and Bond B have 7.1 percent coupons and are priced at par value. Bond A has 8 years to maturity, while Bond B has 19 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...
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 at par value. Bond A has 9 years to maturity, while Bond B has 18 years to maturity. a. If interest rates suddenly rise by 1.4 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.) %Δ...
Both Bond A and Bond B have 7.4 percent coupons and are priced at par value....
Both Bond A and Bond B have 7.4 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 1 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...
Both Bond A and Bond B have 7.2 percent coupons and are priced at par value....
Both Bond A and Bond B have 7.2 percent coupons and are priced at par value. Bond A has 6 years to maturity, while Bond B has 16 years to maturity. a. If interest rates suddenly rise by 1.6 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....
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...
Both Bond A and Bond B have 7 % coupons, are priced at par value, and...
Both Bond A and Bond B have 7 % coupons, are priced at par value, and make semiannual payments. Bond A has 5 years to maturity, whereas Bond B has 15 years to maturity. A) If interest rates suddenly rise by 4 percent, what is the percentage change in the price of Bond A? B) If interest rates suddenly rise by 4 percent, what is the percentage change in the price of Bond B? C) If rates were to suddenly...
Both Bond A and Bond B have 8 percent coupons, make semiannual payments, and are priced...
Both Bond A and Bond B have 8 percent coupons, make semiannual payments, and are priced at par value. Bond A has 2 years to maturity, whereas Bond B has 11 years to maturity. (a) If interest rates suddenly rise by 1 percent, what is the percentage change in the price of Bond A? [3 points] (b) If interest rates suddenly rise by 1 percent, what is the percentage change in the price of Bond B? (c) If rates were...
Both Bond Sam and Bond Dave have 8 percent coupons, make semiannual payments, and are priced...
Both Bond Sam and Bond Dave have 8 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 4 years to maturity, whereas Bond Dave has 12 years to maturity. If interest rates suddenly rise by 4 percent, what is the percentage change in the price of Bond Sam? -12.42%, 12.78%, -12.40% ,-14.18% If interest rates suddenly rise by 4 percent, what is the percentage change in the price of Bond Dave? -25.10%, -25.08% ,27.45% ,-33.51%...
Both Bond Sam and Bond Dave have 8 percent coupons, make semiannual payments, and are priced...
Both Bond Sam and Bond Dave have 8 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 4 years to maturity, whereas Bond Dave has 11 years to maturity.     If interest rates suddenly rise by 3 percent, what is the percentage change in the price of Bond Sam?          If interest rates suddenly rise by 3 percent, what is the percentage change in the price of Bond Dave?          If rates were...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT