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Category > Business & Finance Posted 18 May 2017 My Price 12.00

Assume that you own a 2-year, 10-year and 30-year bond

Assume that you own a 2-year, 10-year and 30-year bond (years to maturity) and all of the same quality. All have the same coupon rate = 7%. The only difference in the bonds is in the years to maturity. Further assume that required YTM on all of these bonds increases by 2 percent and that you observe the following changes in prices on these bonds: -3.6% -20.6% -13.0% Without using a calculator, which bond's price changed by -20.6%? A. 2-year bond B. 10-year bond , C. 30-year bond,D. none of the above because prices should have risen and not fallen.
 
 
 

 

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Status NEW Posted 18 May 2017 03:05 AM My Price 12.00

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