Consider the following: Fixed-rate Bond Fixed-rate Note Price 107.18 Yield to maturity 5.00% Periods to maturity 18 Modified duration 6.9848 a. For an increase in interest rates of 100 basis points, determine the change in value for the fixed-rate not Show your work. 100.00 5.00% 8 3.5851 b. For an increase in interest rates of 100 basis points, determine the change in value for the fixed-rate bon Show your work. c. Which of the two fixed-rate securities are more sensitive to increases interest rates? Why?
Consider the following: Fixed-rate Bond Fixed-rate Note Price 107.18 Yield to maturity 5.00% Periods to maturity 18 Modified duration 6.9848 a. For an increase in interest rates of 100 basis points, determine the change in value for the fixed-rate not Show your work. 100.00 5.00% 8 3.5851 b. For an increase in interest rates of 100 basis points, determine the change in value for the fixed-rate bon Show your work. c. Which of the two fixed-rate securities are more sensitive to increases interest rates? Why?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 3Q: The rate of return on a bond held to its maturity date is called the bonds yield to maturity. If...
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