Both Bond A and Bond B have 9.4 percent coupons and are priced at par value. Bond A has 7 years to maturity, while Bond B has 20 years to maturity. a. If interest rates suddenly rise by 2 percent, what is the percentage change in price of Bond A and Bond B? Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Answer is complete but not entirely correct. %A in Price Bond A Bond B -9.93 % -17.75 X %
Both Bond A and Bond B have 9.4 percent coupons and are priced at par value. Bond A has 7 years to maturity, while Bond B has 20 years to maturity. a. If interest rates suddenly rise by 2 percent, what is the percentage change in price of Bond A and Bond B? Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Answer is complete but not entirely correct. %A in Price Bond A Bond B -9.93 % -17.75 X %
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Both Bond A and Bond B have 9.4 percent coupons and are priced at par value. Bond A has 7 years to maturity,
while Bond B has 20 years to maturity.
a. If interest rates suddenly rise by 2 percent, what is the percentage change in price of Bond A and Bond B?
Note: A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter
your answers as a percent rounded to 2 decimal places.
X Answer is complete but not entirely correct.
Bond A
Bond B
%A in Price
-9.93 %
-17.75 X %
b. If interest rates suddenly fall by 2 percent instead, what would be the percentage change in price of Bond A
and Bond B?
Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal
places.
Bond A
Bond B
Answer is complete but not entirely correct.
%A in Price
9.93 X %
17.75 X %
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