A bond trader purchased each of the following bonds at a yield to maturity of 10%. Immediately after she purchased the bonds, interest rates fell to 6%. What is the percentage change in the price of each bond after the decline in interest rates? Assume annual coupons and annual compounding. Fill in the following table. Do not round intermediate calculations. Round your answers to two decimal places. Price @ 10% Price @ 6% Percentage Change 10-year, 10% annual coupon $ $ % 10-year zero 5-year zero 30-year zero Perpetuity, $100 annual coupon
A bond trader purchased each of the following bonds at a yield to maturity of 10%. Immediately after she purchased the bonds, interest rates fell to 6%. What is the percentage change in the price of each bond after the decline in interest rates? Assume annual coupons and annual compounding. Fill in the following table. Do not round intermediate calculations. Round your answers to two decimal places. Price @ 10% Price @ 6% Percentage Change 10-year, 10% annual coupon $ $ % 10-year zero 5-year zero 30-year zero Perpetuity, $100 annual coupon
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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100%
nterest Rate Sensitivity
A bond trader purchased each of the following bonds at a yield to maturity of 10%. Immediately after she purchased the bonds, interest rates fell to 6%. What is the percentage change in the price of each bond after the decline in interest rates? Assume annual coupons and annual compounding. Fill in the following table. Do not round intermediate calculations. Round your answers to two decimal places.
| Price @ 10% | Price @ 6% | Percentage Change | |
| 10-year, 10% annual coupon | $ | $ | % |
| 10-year zero | |||
| 5-year zero | |||
| 30-year zero | |||
| Perpetuity, $100 annual coupon |
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