P 6.23 Consider the following bonds: Bond Coupon Rate (annual payments) Maturity (yr.s) A 0% 15 B0 % 10 C 4% 15 D 8% 10 What is the percentage change in the price of each bond if its yield to maturity falls from 6% to 5% ?
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- K Assume that a bond will make payments every six months as shown on the following timeline (using six-month periods): 0 2 5 Period $19.53 a. What is the maturity of the bond (in years)? b. What is the coupon rate (as a percentage)? c. What is the face value? Cash Flows View an example Get more help. ★ a. What is the maturity of the bond (in years)? The maturity is years. (Round to the nearest integer.) A 6 1 MacBook Pro & 7 $19.53 * 8 9 C 59 $19.53 60 $19.53+$1,000 Clear all BUB 0 {Consider the following bonds: Bond A B CD с Coupon Rate (annual payments) 0.0% 0.0% 4.3% 7.7% The percentage change in the price of bond A is |___%. (Round to one decimal place.) What is the percentage change in the price of each bond if its yield to maturity falls from 6.9% to 5.9%? The percentage change in the price of bond B is %. (Round to one decimal place.) Maturity (years) 15 The percentage change in the price of bond C is %. (Round to one decimal place.) The percentage change in the price of bond D is %. 21500Bond ABCD Coupon Rate (annual payments) 0.0% 0.0% 3.7% 7.7% Maturity (years) 15 10 15 10 What is the percentage change in the price of each bond if its yield to maturity falls from 6.2% to 5.2%?
- 13. Calculate the percentage change in a bond's price if its current yield is 8 percent, rates are expected to decrease by 0.25% and the bond's duration is 7.5. 1.875%- b. -1.875% c. 1.736% d. -1.736% 15002520.01975 x\Consider the following bonds. Bond A B с D Coupon Rate (annual payments) 0.0% 0.0% 3.5% 7.8% Maturity (years) 10 15 15 10 Which of the bonds A to D is most sensitive to a 1% drop in interest rates from 6.7% to 5.7%? Which bond is least sensitive? Provide an intuitive explanation for your answer.K Assume that a bond will make payments every six months as shown on the following timeline (using six-month periods): Period 0 2 Cash Flows $19.12 $19.12 a. What is the maturity of the bond (in years)? b. What is the coupon rate (as a percentage)? c. What is the face value? a. What is the maturity of the bond (in years)? The maturity is years. (Round to the nearest integer.) 39 $19.12
- Suppose the term structure of interest rate is flat. Consider the following four bonds: Bond Term to Maturity (year) Coupon rate YTM 1 5 10% 7% 2 3 7 7 10% O a. 2,3,4,1 O b. 2,1,4,3 O c. 1,2,3,4 O d. 4,3,2,1 3% 3% 7% 4 7 If the yield-to-maturity for all bonds changes by 1%, rank the bonds from the lowest percentage change in price to the largest percentage change in price based on duration approximation. 7% 5%5. Consider a bond that offers a nominal yield of 6%. If the expected rate of inflation is 3%, according to the Fisher Effect, what is the real yield of the bond? (2 points) A) 2.91% of B) 3.00% C) 5.83% D) 9.00% evijegen inuocaib enom agnibivonq ylevitoste 1Rank the following bonds in order of descending duration: BOND COUPON RATE (%) TIME TO MATURITY (YRS) YTM (%) A 15 20 10 B 15 15 10 C 0 20 10 D 8 20 10 E 15 17 10
- 4- Calculate the equilibrium interest rate of a 1-year discount bond with a face value of 1000. The demand and supply curves for this bond are represented by the following equations: ( B4: Price = -0.8 * Quantity + 1160 B": Price = Quantity +7207.11 A term structure is defined by the following accumulation function: a(t)=e0.03t, for 0 <t≤ 5,e0.06+0.0025(1+t)2, for t>5. If a 10-year bond makes level coupon payments at year 2, 4, 6, 8 and 10.Find the par yield of this bond.6. Yield to Maturity Each of the bonds shown below pays interest annually. Bond Par Value Coupon Years to Maturity Current Value A 12% 15 B 10% 10 C $1000 13% 10 D $1000 8% 4 a) Calculate the yield to maturity (YTM) for each bond. $1000 $500 $850 $560 $1200 $900 b) What relationship exists between the coupon rate and yield to maturity and the par value and market value of a bond? Explain.