In: Finance
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 and Bond B? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
Bond A = _______ %
Bond B = _______ %
Bond J has a coupon of 7.4 percent. Bond K has a coupon of 11.4 percent. Both bonds have 12 years to maturity and have a YTM of 7.8 percent.
a. If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds?
Bond J = _______ %
Bond K = _______ %
b. If interest rates suddenly fall by 2 percent, what is the percentage price change of these bonds?
Bond J = _______ %
Bond K = _______ %
Please refer to below spreadsheet for calculation and answer. Cell reference also provided.
Cell reference -