Bond Face Value Coupon rate Yield to Maturity Term to Maturity Duration A $1000 4% 10%...

Bond	Face Value	Coupon rate	Yield to Maturity	Term to Maturity	Duration
A	$1000	4%	10%	5	4.57
B	$1000	12%	10%	5	4.07

Now suppose the yield to maturity becomes 11%. What are the % change in prices of bond A and B?

Solutions

Expert Solution

Solution:-

To Calculate Price of Bond when YTM is 10%-

To Calculate Price of Bond when YTM is 11%-

% change in Price of Bond A =

% change in Price of Bond A = -4.05%

% change in Price of Bond B =

% change in Price of Bond B = -5.70%

If you have any query related to question then feel free to ask me in a comment.Thanks.

jeff jeffy answered 1 year ago

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