Question

A bond has a $1,000 par value, 10 years to maturity, and a 8% annual coupon and sells for $980.

1. What is its yield to maturity (YTM)? Round your answer to two decimal places.
   
      %
   
2. Assume that the yield to maturity remains constant for the next 5 years. What will the price be 5 years from today? Do not round intermediate calculations. Round your answer to the nearest cent.

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 7%. 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 @ 7%	Percentage Change
10-year, 10% annual coupon	$	$	%
10-year zero
5-year zero
30-year zero
$100 perpetuity

Answer 1