Both Bond A and Bond B have 8.8 percent coupons and are priced at par value. Bond A has 9 years to maturity, while Bond B has 18 years to maturity. a. If interest rates suddenly rise by 1.4 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.) %A in Price Bond A % Bond B % b. If interest rates suddenly fall by 1.4 percent instead, 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.) hat would be %A in Price Bond A Bond B %
Both Bond A and Bond B have 8.8 percent coupons and are priced at par value. Bond A has 9 years to maturity, while Bond B has 18 years to maturity. a. If interest rates suddenly rise by 1.4 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.) %A in Price Bond A % Bond B % b. If interest rates suddenly fall by 1.4 percent instead, 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.) hat would be %A in Price Bond A Bond B %
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 8.8 percent coupons and are priced at
par value. Bond A has 9 years to maturity, while Bond B has 18 years to
maturity.
a. If interest rates suddenly rise by 1.4 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.)
%A in Price
Bond A
Bond B
%
b. If interest rates suddenly fall by 1.4 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.)
%A in Price
Bond A
%
Bond B
%
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