Bond J has a coupon% of 4.7. Bond S has a coupon% of 14.7. Both have...

Bond J has a coupon% of 4.7. Bond S has a coupon% of 14.7. Both have ten yrs to maturity, make semiannual payments, and have a YTM%=10.4. Face value=$1,000.

Requirement 1:

If rates rise 3 percent, what is the percentage change in the price of these bonds? Hint: this is similar to the previous problem, except that here you must solve for the old price first (in the previous problem it was given as $1,000). (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places (e.g., 32.16).)

	Percentage change in price
Bond J	%
Bond S	%

Requirement 2:

If interest rates suddenly fall by 3 percent instead, what is the percentage change in the price of these bonds? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

	Percentage change in price
Bond J	%
Bond S	%

Solutions

Expert Solution

jeff jeffy answered 1 year ago

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