Question
In: Finance
19. Which bond is more sensitive to an interest rate change of 0.75%? Bond A: YTM...
19.
Which bond is more sensitive to an interest rate change of
0.75%?
Bond A: YTM = 4.00%, maturity = 8 years, coupon = 6% or $60, par
value = $1,000.
Bond B: YTM = 3.50%, maturity = 5 years, coupon = 7% or $70, par
value = $1,000.
bond A
both are equally sensitive
bond B
cannot be determined
Solutions
Expert Solution
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jeff jeffy answered 11 months agoRelated Solutions
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The YTM on a bond is the interest rate you earn on your investment if interest...
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The YTM on a bond is the interest rate you earn on your investment if interest...
The YTM on a bond is the interest rate you earn on your
investment if interest rates don’t change. If you actually sell the
bond before it matures, your realized return is known as the
holding period yield (HPY).
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Suppose that today you buy an annual coupon bond with a coupon
rate of 8.4 percent for $775. The bond has 7 years to maturity and
a par value of $1,000. What rate of return do you expect to earn...
The YTM on a bond is the interest rate you earn on your investment if interest...
The YTM on a bond is the interest rate you earn on your
investment if interest rates don’t change. If you actually sell the
bond before it matures, your realized return is known as the
holding period yield (HPY).
a. Suppose that today you buy a bond with an annual coupon rate
of 8 percent for $1,170. The bond has 16 years to maturity. What
rate of return do you expect to earn on your investment? Assume a
par value...
The YTM on a bond is the interest rate you earn on your investment if interest...
The YTM on a bond is the interest rate you earn on your
investment if interest rates don’t change. If you actually sell the
bond before it matures, your realized return is known as the
holding period yield (HPY).
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Suppose that today you buy an annual coupon bond with a coupon
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The YTM on a bond is the interest rate you earn on your investment if interest...
The YTM on a bond is the interest rate you earn on your
investment if interest rates don’t change. If you actually sell the
bond before it matures, your realized return is known as the
holding period yield (HPY).
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The YTM on a bond is the interest rate you earn on your investment if interest...
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investment if interest rates don’t change. If you actually sell the
bond before it matures, your realized return is known as the
holding period yield (HPY).
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investment if interest rates don’t change. If you actually sell the
bond before it matures, your realized return is known as the
holding period yield (HPY).
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