Both Bond Sam and Bond Dave have 9.2 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 4 years to maturity, whereas Bond Dave has 21 years to maturity. Both bonds have a par value of 1,000. a. If interest rates suddenly rise by 3 percent, what is the percentage change in the price of these bonds? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. b. If rates were to suddenly fall by 3 percent instead, what would be the percentage change in the price of these bonds? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Bond Sam Bond Dave a. Percentage change in price b. Percentage change in price % % % %
Both Bond Sam and Bond Dave have 9.2 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has 4 years to maturity, whereas Bond Dave has 21 years to maturity. Both bonds have a par value of 1,000. a. If interest rates suddenly rise by 3 percent, what is the percentage change in the price of these bonds? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. b. If rates were to suddenly fall by 3 percent instead, what would be the percentage change in the price of these bonds? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Bond Sam Bond Dave a. Percentage change in price b. Percentage change in price % % % %
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 Sam and Bond Dave have 9.2 percent coupons, make semiannual
payments, and are priced at par value. Bond Sam has 4 years to maturity, whereas
Bond Dave has 21 years to maturity. Both bonds have a par value of 1,000.
a. If interest rates suddenly rise by 3 percent, what is the percentage change in the
price of these bonds?
Note: A negative answer should be indicated by a minus sign. Do not round
intermediate calculations and enter your answers as a percent rounded to 2
decimal places, e.g., 32.16.
b. If rates were to suddenly fall by 3 percent instead, what would be the percentage
change in the price of these bonds?
Note: Do not round intermediate calculations and enter your answer as a percent
rounded to 2 decimal places, e.g., 32.16.
Bond Sam
Bond Dave
a. Percentage change in price
b. Percentage change in price
%
%
%
%
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