Assume that today you purchased a Treasury Note with the following characteristics: Par (face) value = $1,000 Maturity = five years from today Coupon interest rate =5% ALL OTHER THINGS BEING EQUAL: If the prevailing interest rates for instruments of similar risk and maturity were to increase from 5% to 10% next week, what would happen to the value of your bond in the secondary market? Explain. (It is not necessary to calculate the yield to maturity. Simply explain the general effects of the change in rates)
Assume that today you purchased a Treasury Note with the following characteristics: Par (face) value = $1,000 Maturity = five years from today Coupon interest rate =5% ALL OTHER THINGS BEING EQUAL: If the prevailing interest rates for instruments of similar risk and maturity were to increase from 5% to 10% next week, what would happen to the value of your bond in the secondary market? Explain. (It is not necessary to calculate the yield to maturity. Simply explain the general effects of the change in rates)
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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Assume that today you purchased a Treasury Note with the following characteristics:
- Par (face) value = $1,000
- Maturity = five years from today
- Coupon interest rate =5%
ALL OTHER THINGS BEING EQUAL:
If the prevailing interest rates for instruments of similar risk and maturity were to increase from 5% to 10% next week, what would happen to the
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