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Category > Business & Finance Posted 26 May 2017 My Price 11.00

1) Bond J is a 5 percent coupon bond. Bond

1)

Bond J is a 5 percent coupon bond. Bond K is a 11 percent coupon bond. Both bonds have 14 years to maturity, make semiannual payments, and have a YTM of 8 percent.

 

If interest rates suddenly rise by 2 percent, what is the percentage price change of these bonds?(Negative amount should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 32.16)))

 

   
Percentage change in price of Bond J %
Percentage change in price of Bond K %

 

What if rates suddenly fall by 2 percent instead? (Round your answers to 2 decimal places. (e.g., 32.16))

 

   
Percentage change in price of Bond J %
Percentage change in price of Bond K %

 

2)

Bond X is a premium bond making semiannual payments. The bond pays a 10 percent coupon, has a YTM of 8 percent, and has 16 years to maturity. Bond Y is a discount bond making semiannual payments. This bond pays a 8 percent coupon, has a YTM of 10 percent, and also has 16 years to maturity.

 

What is the price of each bond today? (Round your answers to 2 decimal places. (e.g., 32.16))

 

   
Price of bond X $
Price of bond Y $

 

If interest rates remain unchanged, what do you expect the price of these bonds to be one year from now? In seven years? In twelve years? In 14 years? In 16 years? (Round your answers to 2 decimal places. (e.g., 32.16))

 

Price of bond Bond X Bond Y
One year $ $
Seven years $ $
Twelve years $ $
14 years $ $
16 years $ $

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Status NEW Posted 26 May 2017 05:05 PM My Price 11.00

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