Question

In: Finance

INTEREST RATE SENSITIVITY An investor purchased the following 5 bonds. Each bond had a par value...

INTEREST RATE SENSITIVITY

An investor purchased the following 5 bonds. Each bond had a par value of $1,000 and an 10% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 5%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Round your answers to the nearest cent or to two decimal places. Enter all amounts as positive numbers.

Price @ 10% Price @ 5% Percentage Change
10-year, 10% annual coupon $ $    %
10-year zero          
5-year zero          
30-year zero          
$100 perpetuity          

Solutions

Expert Solution

The following are the data inputs in spreadsheet:

The following are the obtained results in spreadsheet:


jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

An investor purchased the following 5 bonds. Each bond had a par value of $1,000 and...
An investor purchased the following 5 bonds. Each bond had a par value of $1,000 and a 10% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 5%. What is the percentage change in price for each bond after the decline in interest rates? (Round all the answers below to two decimal places) Price 10% Price 5%    Percentage Change 10-year, 10% annual coupon 10-year...
An investor purchased the following 5 bonds. Each bond had a par value of $1,000 and...
An investor purchased the following 5 bonds. Each bond had a par value of $1,000 and an 8% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 6%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Round your answers to the nearest cent or to two decimal places. Enter all amounts as...
An investor purchased the following five bonds. Each bond had a par value of $1,000 and...
An investor purchased the following five bonds. Each bond had a par value of $1,000 and a 8% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 7%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Enter all amounts as positive numbers. Do not round intermediate calculations. Round your monetary answers to...
An investor purchased the following five bonds. Each bond had a par value of $1,000 and...
An investor purchased the following five bonds. Each bond had a par value of $1,000 and a 9% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 5%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Enter all amounts as positive numbers. Do not round intermediate calculations. Round your monetary answers to...
An investor purchased the following five bonds. Each bond had a par value of $1,000 and...
An investor purchased the following five bonds. Each bond had a par value of $1,000 and an 8% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 6%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Enter all amounts as positive numbers. Do not round intermediate calculations. Round your monetary answers to...
An investor purchased the following five bonds. Each bond had a par value of $1,000 and...
An investor purchased the following five bonds. Each bond had a par value of $1,000 and a 11% yield to maturity on the purchase day. Immediately after the investor purchased them, interest rates fell, and each then had a new YTM of 5%. What is the percentage change in price for each bond after the decline in interest rates? Fill in the following table. Enter all amounts as positive numbers. Do not round intermediate calculations. Round your monetary answers to...
            An investor purchased the following three bonds. Each bond has a par value of $500....
            An investor purchased the following three bonds. Each bond has a par value of $500. Each bond has a 5% yield on maturity on purchase day. Immediately after the purchase, the interest rate fell, and each had a new yield to maturity of 4%. What is the percentage change in the price of each bond after the fall in interest rates? Please complete the table below:             Bond                                         Price at 5%                   Price at 4%                Percentage Change             5 year, 5% annual coupon          ___________              ________            ________...
An investor just purchased a 5-year $1,000 par value bond. The coupon rate on this bond...
An investor just purchased a 5-year $1,000 par value bond. The coupon rate on this bond is 10% annually, with interest paid every year. If the investor expects to earn 12% simple rate of return, how much the investor should pay for it?
1. A year ago, an investor purchased bonds in General Electric at par. The bond had...
1. A year ago, an investor purchased bonds in General Electric at par. The bond had a coupon of 8% at the date of issue. The bond declined over the course of the year to 94. What is the current yield on the bond? Answer is 8.51% 2. XYZ Inc. has some bonds outstanding, currently with 10 years remaining to maturity. The coupon rate is 8%, and the interest is paid semi-annually. The face value of the bonds is $100....
An investor buys a bond with a $100 par value and a 5% coupon rate for...
An investor buys a bond with a $100 par value and a 5% coupon rate for $97. The bond pays interest semiannually. Exactly one year later, just after receiving the second coupon payment, the investor sells the bond for $96. What was the investor’s rate of return over the year from owning the bond? How do you get the answer using a financial calculator?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT