Both Bond A and Bond B have 6.2 percent coupons and are priced at par value. Bond A has 6 years to maturity, while Bond B has 15 years to maturity. a. If interest rates suddenly rise by 1 percent, what is the percentage change in price of Bond A and Bond B? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) b. If interest rates suddenly fall by 1 percent instead, what would be the percentage change in price of Bond A and Bond B? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
Both Bond A and Bond B have 6.2 percent coupons and are priced at par value. Bond A has 6 years to maturity, while Bond B has 15 years to maturity. a. If interest rates suddenly rise by 1 percent, what is the percentage change in price of Bond A and Bond B? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) b. If interest rates suddenly fall by 1 percent instead, what would be the percentage change in price of Bond A and Bond B? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
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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Transcribed Image Text:Both Bond A and Bond B have 6.2 percent coupons and are priced at par value. Bond A has 6 years to maturity, while
Bond B has 15 years to maturity. a. If interest rates suddenly rise by 1 percent, what is the percentage change in price of
Bond A and Bond B? (A negative value should be indicated by a minus sign. Do not round intermediate calculations. Enter
your answers as a percent rounded to 2 decimal places.) b. If interest rates suddenly fall by 1 percent instead, what would
be the percentage change in price of Bond A and Bond B? (Do not round intermediate calculations. Enter your answers as
a percent rounded to 2 decimal places.)
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