Bond J has a coupon rate of 3%. Bond K has a coupon rate of 9%. Both bonds have 19 years to maturity, make semiannual payments, and have a YTM of 6%. If interest rates suddenly rise by 2%, what is the percentage price change of these bonds? What if rates suddenly fall by 2% instead? All bond price answers should be dollar prices. Bond J: Coupon Rate 3% Settlement Date 1/1/2000 Maturity Date 1/1/2019 Redemption (% of par) 100 Number of Coupons Per Year 2 Bond K: Coupon Rate 9% Settlement Date 1/1/2000 Maturity Date 1/1/2019 Redemption (% of par) 100 Number of Coupons Per Year 2 Par Value for Both Bonds $1,000 Current YTM 6% New YTM 8% New YTM 4%
Bond J has a coupon rate of 3%. Bond K has a coupon rate of 9%. Both bonds have 19 years to maturity, make semiannual payments, and have a YTM of 6%. If interest rates suddenly rise by 2%, what is the percentage price change of these bonds? What if rates suddenly fall by 2% instead? All bond price answers should be dollar prices. Bond J: Coupon Rate 3% Settlement Date 1/1/2000 Maturity Date 1/1/2019 Redemption (% of par) 100 Number of Coupons Per Year 2 Bond K: Coupon Rate 9% Settlement Date 1/1/2000 Maturity Date 1/1/2019 Redemption (% of par) 100 Number of Coupons Per Year 2 Par Value for Both Bonds $1,000 Current YTM 6% New YTM 8% New YTM 4%
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
Related questions
Question
Please only use 1 excel formula/cell to solve the the following question:
Bond J has a coupon rate of 3%. Bond K has a coupon rate of 9%. Both bonds have 19 years to maturity, make semiannual payments, and have a YTM of 6%. If interest rates suddenly rise by 2%, what is the percentage price change of these bonds? What if rates suddenly fall by 2% instead? All
| Bond J: | |
| Coupon Rate | 3% |
| Settlement Date | 1/1/2000 |
| Maturity Date | 1/1/2019 |
| Redemption (% of par) | 100 |
| Number of Coupons Per Year | 2 |
| Bond K: | |
| Coupon Rate | 9% |
| Settlement Date | 1/1/2000 |
| Maturity Date | 1/1/2019 |
| Redemption (% of par) | 100 |
| Number of Coupons Per Year | 2 |
| Par Value for Both Bonds | $1,000 |
| Current YTM | 6% |
| New YTM | 8% |
| New YTM | 4% |
Transcribed Image Text:Complete the following analysis. Do not hard code values in your calculations. Leave
the "Basis" input blank in the function. All bond prices should be in dollars. You must
use the built-in Excel function to answer the bond price questions.
Price at current YTM:
Price of Bond J
Price of Bond K
Price if YTM increases:
Price of Bond J
Price of Bond K
% change in Bond J
% change in Bond K
Price if YTM decreases:
Price of Bond J
Price of BondK
Transcribed Image Text:Price if YTM decreases:
Price of Bond J
Price of Bond K
% change in Bond J
% change in Bond K
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 2 images
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education