Question
In: Finance
Both Bond Sam and Bond Dave have 9 percent coupons, make semiannual payments, and are priced...
Both Bond Sam and Bond Dave have 9 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 3 years to maturity, whereas Bond Dave has 20 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in the price of Bond Sam? Of Bond Dave? If rates were to suddenly fall by 2 percent instead, what would the percentage change in the price of Bond Sam be then? Of Bond Dave? Illustrate your answers by graphing bond prices versus YTM. What does this problem tell you about the interest rate risk of longer-term bonds?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Both Bond Sam and Bond Dave have 9 percent coupons, make semiannual payments, and are priced...
Both Bond Sam and Bond Dave have 9 percent coupons, make
semiannual payments, and are priced at par value. Bond Sam has 2
years to maturity, whereas Bond Dave has 17 years to maturity.
(Do not round your intermediate calculations.)
Requirement 1:
(a)
If interest
rates suddenly rise by 2 percent, what is the percentage change in
the price of Bond Sam?
(b)
If interest
rates suddenly rise by 2 percent, what is the percentage change in...
Both Bond Sam and Bond Dave have 9 percent coupons, make semiannual payments, and are priced...
Both Bond Sam and Bond Dave have 9 percent coupons, make
semiannual payments, and are priced at par value. Bond Sam has 4
years to maturity, whereas Bond Dave has 18 years to maturity.
(Do not round your intermediate calculations.)
Requirement 1:
(a)
If interest rates suddenly rise by 5 percent, what is the
percentage change in the price of Bond Sam?
(Click to
select) -14.93% 18.33% 15.48% -17.55% -14.91%
(b)
If interest rates suddenly rise by 5 percent, what is the...
Both Bond Sam and Bond Dave have 9 percent coupons, make semiannual payments, and are priced...
Both Bond Sam and Bond Dave have 9 percent coupons, make
semiannual payments, and are priced at par value. Bond Sam has 3
years to maturity, whereas Bond Dave has 11 years to maturity.
If interest rates suddenly rise by 4 percent, what is the
percentage change in the price of Bond Sam? 9.92% -9.68% -9.66%
-10.72%
If interest rates suddenly rise by 4 percent, what is the
percentage change in the price of Bond Dave? -29.99% -23.07% 25.11%
-23.05%...
Both Bond Sam and Bond Dave have 9 percent coupons, make semiannual payments, and are priced...
Both Bond Sam and Bond Dave have 9 percent coupons, make
semiannual payments, and are priced at par value. Bond Sam has 2
years to maturity, whereas Bond Dave has 12 years to maturity. (Do
not round your intermediate calculations.)
Requirement 1: (a) If interest rates suddenly rise by 5 percent,
what is the percentage change in the price of Bond Sam?
(b) If interest rates suddenly rise by 5 percent, what is the
percentage change in the price of...
Both Bond Sam and Bond Dave have 9 percent coupons, make semiannual payments, and are priced...
Both Bond Sam and Bond Dave have 9 percent coupons, make
semiannual payments, and are priced at par value. Bond Sam has
three years to maturity, whereas Bond Dave has 16 years to
maturity.
a.
If interest rates suddenly rise by 2 percent, what is the
percentage change in the price of Bond Sam and Bond Dave?
(A negative answer should be indicated by a minus
sign. Do not round intermediate calculations and
enter your answers as a percent rounded...
Both Bond Sam and Bond Dave have 6 percent coupons, make semiannual payments, and are priced...
Both Bond Sam and Bond Dave have 6 percent coupons, make
semiannual payments, and are priced at par value. Bond Sam has 4
years to maturity, whereas Bond Dave has 14 years to maturity. If
interest rates suddenly rise by 2 percent, what is the percentage
change in the price of Bond Sam? • 6.83% • -6.71% • -6.73% • -7.22%
If interest rates suddenly rise by 2 percent, what is the
percentage change in the price of Bond Dave?...
Both Bond Sam and Bond Dave have 6 percent coupons, make semiannual payments, and are priced...
Both Bond Sam and Bond Dave have 6 percent coupons, make
semiannual payments, and are priced at par value. Bond Sam has two
years to maturity, whereas Bond Dave has 15 years to maturity.
a. If interest rates suddenly rise by 2 percent, what is the
percentage change in the price of Bond Sam and Bond Dave?
b. If rates were to suddenly fall by 2 percent instead, what
would be the percentage change in the price of Bond Sam...
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 10 percent coupons, make semiannual payments, and are priced...
Both Bond Sam and Bond Dave have 10 percent coupons, make
semiannual payments, and are priced at par value. Bond Sam has 4
years to maturity, whereas Bond Dave has 17 years to maturity.
If interest rates suddenly rise by 3 percent, what is the
percentage change in the price of Bond Sam?
-10.05%
-9.11%
-9.13%
9.35%
If interest rates suddenly rise by 3 percent, what is the
percentage change in the price of Bond Dave?
...
Both Bond Sam and Bond Dave have 10 percent coupons, make semiannual payments, and are priced...
Both Bond Sam and Bond Dave have 10 percent coupons, make
semiannual payments, and are priced at par value. Bond Sam has 3
years to maturity, whereas Bond Dave has 17 years to maturity.
(Do not round your intermediate calculations.)
Requirement
1:
(a)
If interest rates suddenly rise
by 4 percent, what is the percentage change in the price of Bond
Sam?
(Click to select)9.78% -10.54%
-9.51% 10.85% -9.53%
(b)
If interest rates suddenly rise
by 4...
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