Question

1)What is the percentage change in price for a zero coupon bond if the yield changes from 5.5​% to 9​%? The bond has a face value of ​$1,000 and it matures in 11 years. Use the price determined from the first​ yield, 5.5​%, as the base in the percentage calculation. The percentage change in the bond price if the yield changes from 5.5​% to 9​% is ​%

2)With celebrity​ bonds, celebrities raise money by issuing bonds to investors. The royalties from sales of the music are used to pay interest and principal on the bonds. In April of​ 2009, EMI announced that it intended to securitize its back catalogue with the help of the Bank of Scotland. The bond was issued with a coupon rate of 6.55% and will mature on this day 31 years from now. The yield on the bond issue is currently 6.35​%. At what price should this bond trade​ today, assuming a face value of ​$1,000 and annual​ coupons? The price of the bond today should be $

3) A Ford Motor Co. coupon bond has a coupon rate of 6.95%, and pays annual coupons. The next coupon is due tomorrow and the bond matures 36 years from tomorrow. The yield on the bond issue is 6.1​%. At what price should this bond trade​today, assuming a face value of ​$1,000 The price of the bond today should be ​$.

Answer 1

Q 1
	Initial price	$554.91
	Price after change	$387.53
	% change in price	-30.16%
Q2	Price of the bond	$1,026.83
Q3	Price of the bond	$1,122.81

WORKINGS